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Pricing Decisions and Strategies, GROUP 3, DEFINITION - Coggle Diagram
Pricing Decisions and Strategies
THE EFFECT OF ANTITRUST LAW ON PRICING
What is Antirust?
Competition law
Antitrust laws are statues that apply to nearly all industries and levels of business. The laws are designed to protect competition. Antitrust laws govern transportation, manufacturing, marketing, and distribution. The laws prohibit several practices that restrain trade, and they're necessary for a free and open marketplace.
The types of illegal practices that antitrust laws target include the following
Example of Antitrust Law
The Clayton Act
The Federal Trade Commission Act
The Sherman Antitrust Act
Robinson-Patman Act
What Antitrust Law do ?
to ensure lower prices of a product
LIFE-CYCLE BUDGETING AND COSTING WHEN MAKING PRICING DECISION
What is Life Cycle Budgeting ?
An estimate of the total amount of sales and profits
Estimate includes the costs to develop, market, and service a product
USES OF LIFE CYCLE BUDGETING
Estimating the profits and cash flows
Help in making decision of whether to invest in a product.
Life-Cycle Costing
DEFINITION
Process of compiling all costs that the owner or producer of an asset will incur over its lifespan.
In capital budgeting, the total cost of ownership is compiled and then reduced to its present value in order to determine the expected return on investment (ROI) and net cash flows.
Importance
The development period for R&D and design is long and costly
Many costs are locked at R&D and design stages
TWO PRICING PRACTICES IN WHICH NON-COST FACTORS ARE IMPORTANT
PRICE DISCRIMINATION
FORM
Retail Incentives
Gender Based Discounts
Discounts based on occupation
Premium Pricing
Coupons
Financial Aid
Haggling
TYPE
Second-degree price discrimination
Third-degree price discrimination
First-degree price discrimination
PURPOSE
To make the most revenue possible from every customer
DEFINITION
Practice of charging different prices for the same product to different groups of customers when these prices are relative of cost differences
Pure price discrimination - seller charge the buyer the absolute maximum price that he willing to pay
HOW IT WORK
A producer that can charge P to its customers with inelastic demand and P1 to those with elastic demand. It will extract more total profit that if it had charged just one price
EXAMPLE
Pharmaceutical Industry
Academic Textbook Industry
Airline Industry
PEAK-LOAD PRICING
PURPOSE
To regulate demand so that it stays within a manageable level of what can be supplied
FORM
Based on the efficiency
High-traffic
High demand times
High usage
Low demand times
DEFINITION
Pricing strategy-the high price is charged for the goods and services during times when their demand is at peak
The high price charged during the high demand period
EXAMPLE
Airlines institute like AirAsia or Malindo peak pricing during periods of high demand, such as holidays in which consumers travel more.
HOW IT DONE
Charging a high price during demand peaks, and a lower price
during off-peak time periods.
GROUP 3
3) ERICKA FOO (D20181082747)
1) SITI NOR SYUHADA BINTI AWANG (D20181082737)
2) NUR SYAMIMI BINTI ASHRI (D20181082740)
5) JESSICA YAKIUN (D20181082768)
4) MARK RONALD MIMING (D20181082762)
LINK VIDEO PRESENTATION: (
https://drive.google.com/file/d/18gguokPcnF34G0CPMELB-5kIBeZVvxmm/view?usp=drivesdk
)
DEFINITION
