A Note On Microeconomics For Strategists Pdf Converter
ADVERTISEMENTS:Here the firm is also not in a position to determine consumer reaction. The question is, what do we mean by a new product? New products for our purposes will include original products, improved products, modified products and new brands that the firm develops through its own R&D efforts.When fixing the first price, the decision is obviously a major one. When the company introduces its product for the first time, the whole future depends heavily on the soundness of initial pricing decision.
- A Note On Microeconomics For Strategists Pdf Converter Mac
- A Note On Microeconomics For Strategists Pdf Converter Pdf
- A Note On Microeconomics For Strategists Pdf Converter Online
A Note On Microeconomics For Strategists Pdf Converter Mac
A Note On Microeconomics For Strategists Pdf Viewer. Master the CLEP 2014 - Ebook download as PDF File (.pdf), Text File (.txt) or read book online. A hedge is an investment position intended to offset potential losses or gains that may be incurred by a companion investment. In simple language, a hedge is used to. Stockholders' Equity Note that the premium on the issuance of. It is important to note that this chapter will provide an overview of consumer behaviour theory and that an Internet perspective on consumer behaviour, and more specifically consumer decision-making, will be provided in Chapter 4. Mass production and mass marketing strategies of that time.
Top management is accountable for the new product’s success record. ADVERTISEMENTS:Top management must establish specific criteria for acceptance of new product ideas especially in a large multidivisional company where all kinds of projects bubble up as favourites of various managers. There are always competitors who would also like to produce it at the earliest opportunity. Pricing decision assumes special importance when one or more competitors change their prices or products or both.Sometimes, the competitors may introduce a new brand without altering the price of an existing brand. If the new brand is perceived to compete with a given brand more effectively, then the firm in question may have to think on its pricing policy once again.The price fixed for the new product must:(i) Earn good profits for the firm over the life of the product.
ADVERTISEMENTS:(A) Skimming Pricing(B) Penetration Pricing (A) Skimming Pricing:Skimming pricing is known as charging high price in initial stages. This can be followed by a firm by charging skimming price for a new product in pioneering stage. When demand is either unknown or more inelastic at this stage, market is divided into segments on the basis of different degree of elasticity of demand of different consumers.This is a short period device for pricing. The demand for new products is likely to be less price elastic in the early stages, that is, the initial high price helps to “Skim the Cream” of the market which is relatively insensitive to price. ADVERTISEMENTS:This policy is shown in Fig.
1, where the manufacturer of new product initially determines OP price and sells OQ quantity. Thus he receives KPMN abnormal profit. Under this policy, consumers are distinguished by the producers on the basis of their intensity of desire for a commodity.For example, in the beginning the prices of computers, T.Vs, electronic calculators, etc., were very high but now they are declining every year.
A high initial price together with heavy promotional expenditure may be used to launch a new product if conditions are appropriate.These conditions are listed below:(i) Demand is likely to be less price elastic in the early stages than later. The cross elasticity demand should be very low.(ii) Launching a new product with a high price is an efficient device for breaking the market into segments that differ in price elasticity of demand.(iii) When the demand elasticity is unknown, high introductory price serves as a refusal price during the stage of exploration.(iv) High initial prices help to finance the floatation of the product.
In the early stages, the cost of production and organisation of distribution are high. In addition, research and promotional investments have to be made. (B) Penetration Pricing:Penetration price is known as charging lowest price for the new product. This is aimed to quick in sales, capture market share, utilise full capacity and economies of scale in productive process and keep the competitors away from the market.Penetration price policy can be adopted in the following circumstances:(i) There is very high price elasticity of demand.(ii) There are substantial cost savings due to enhanced production process.(iii) By nature the product is acceptable to the mass of consumers.(iv) There is no strong patent protection. ADVERTISEMENTS:(v) There is imminent threat of potential competition so that a big share of the market must be captured quickly.Penetration price is a long term pricing strategy and should be adopted with great caution.
A Note On Microeconomics For Strategists Pdf Converter Pdf
A Note On Microeconomics For Strategists Pdf Converter Online
Penetration pricing is successful also when there is no elite market. When a firm adopts a penetrating pricing policy, adjustments to price throughout the product life cycle are minimal. Since this policy prevents competition, it is also referred to as ‘Stay-out’ price policy.Penetration price is explained in Fig. 2, where market price is OP o, and quantity demanded is OQ o. Now the producer of a new product fixes the price less than the market price i.e., OP 1and sells OQ 1more quantity. Obviously, it has a wide potential market.