PRICING AND DISCOUNTING

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  • Pricing & Discounting
    • Setting Prices
      • Basic cost-based pricing
      • Sophisticated market-based pricing
    • Cost-based pricing
      • Cannot be sure they're maximising profits
      • Method is inwardly focused on company information
      • Does not take account of what customers are willing to pay
    • Market-based pricing
      • Assesses what customers are willing to pay
      • The company can work out whether it can operate profitably
    • Changing price level
      • Changes in input costs
      • Competitive pressure
      • Desire to increase sales or market share
      • Needs to understand price elasticity - the effect that a change in price has on sales
    • Price-based promotions
      • Addiction for many marketers
      • Generally do not add new customers
      • Only temporary sales effects
      • Tend to have a large negative effect on profits

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