Cost-Oriented Pricing
Identify two cost oriented approach and provide hypothetical examples for each? Cost oriented approach is when a company sets a price of a product that covers marketing and production cost. An example would be an apples iphone. It cost about $200 to make and they sell a brand new one without an contract for $800. So I am guessing the rest of the money is used to cover production, marketing and make a profit. Also Dr. Dre beats are made in china and are priced at $300 but cost $80 to make. So same an apple the rest of the money is used to cover production, marketing and make a profit.
Why do marketers use 99 price endings? Since everyone reads left to right marketers know that buyers would rather see a $2.99 than $3, Also it makes it look like the product is on sale. Its a psychological trick.
Why would marketers want movement along the demand curve? And how is this achieved? A shit in demand curve is caused by the consumers. Marketers don't want consumers to have different preference(or control) so instead of a shift they want movement along the curve so customers still want the product but at a different price. If customers shift the demand curve the marketers wont know which way its going and company can get an increase or decrease in profit.(Demand curve can shift left(bad) or right(good)) A movement along the demand curve is achieved when price is changed.
Touché Toiletries, Inc., has developed an addition to its Lizardman Cologne line tentatively branded Ode d’Toade Cologne. Unit variable costs are 45 cents for a three-ounce bottle, and heavy advertising expenditures in the first year would result in total fixed costs of $900,000. Ode d’Toade Cologne is priced at $7.50 for a three ounce bottle. How many bottles of Ode d’Toade must be sold to break even?
900000/(7.5-.45)=127,660 units(127,659.57)
957,446,81 sales
Why do marketers use 99 price endings? Since everyone reads left to right marketers know that buyers would rather see a $2.99 than $3, Also it makes it look like the product is on sale. Its a psychological trick.
Why would marketers want movement along the demand curve? And how is this achieved? A shit in demand curve is caused by the consumers. Marketers don't want consumers to have different preference(or control) so instead of a shift they want movement along the curve so customers still want the product but at a different price. If customers shift the demand curve the marketers wont know which way its going and company can get an increase or decrease in profit.(Demand curve can shift left(bad) or right(good)) A movement along the demand curve is achieved when price is changed.
Touché Toiletries, Inc., has developed an addition to its Lizardman Cologne line tentatively branded Ode d’Toade Cologne. Unit variable costs are 45 cents for a three-ounce bottle, and heavy advertising expenditures in the first year would result in total fixed costs of $900,000. Ode d’Toade Cologne is priced at $7.50 for a three ounce bottle. How many bottles of Ode d’Toade must be sold to break even?
900000/(7.5-.45)=127,660 units(127,659.57)
957,446,81 sales