By Michael Armstrong
This consultant to trendy thoughts in all fields of administration is a perfect significant other for pro managers, in addition to a vital reference ebook for enterprise and administration scholars. It contains over a hundred systematic and analytical tools used to help in decision-making and to enhance potency and effectiveness.
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Market-based, which adopts a customer/demand focus. ᔢ Competitor-related, which fixes prices by reference to those charged by competitors. The economist’s approach is of purely theoretical interest. In practice it is the accountant’s or the market-based approaches as described below that are the ones used. 20 ᔡ Marketing Management THE ACCOUNTANT’S APPROACH The aim of the accountant’s approach is to seek a targeted rate of return on investment for a specific level of sales. The main techniques used are: ᔢ ᔢ ᔢ ᔢ cost-plus pricing; standard cost pricing; marginal pricing; break-even analysis.
Unless the elasticity of demand (the impact of price changes on sales) is taken into account, break-even analysis can be misleading. Target pricing Target pricing techniques are based on break-even analysis. They involve: ᔢ estimating demand at different price levels; ᔢ drawing up total revenue curves at different price levels; ᔢ referring to the break-even chart and assessing the profit implications of setting different price levels; ᔢ making a final decision on price levels and profit targets by considering the profit implications in relation to estimates of sales volumes and then selecting the optimum alternative.
Improve product features in response to initial consumer reaction. Growth stage ᔢ ᔢ ᔢ ᔢ ᔢ Improve quality. Modify product characteristics. Extend market into new segments. Develop new distribution channels. Reduce prices to attract the next layer of price-sensitive buyers. Maturity stage ᔢ ᔢ ᔢ ᔢ ᔢ Find new market segments and customers. Reposition brand to appeal to a larger or faster-growing segment. Encourage increased usage among existing customers. Modify product characteristics – new features, style improvements.
A Handbook of Management Techniques by Michael Armstrong