Determining price levels and pricing policy

Abstract Determining charge levels and pricing policy affects revenues and consumer carry and thus remains one of the most important elements in determining lucrativeness and market share. Part of the pricing process involves the presentiment of agonistical reactions to outlay changes and its economic effects on bring out and gather up. This paper examines the effect of a impairment drop-off scheme on harvest-time X given a hypothetical map situation. The paper discusses the business situation and provides an estimated change in motherfucker with and without a competitive response given entropy authentic from marketing, general management and accounting. The final section concludes the paper. Business locating In an earlier memorandum, product management requested info from marketing, general management, and accounting to helper evaluate the effect of a proposed 10% price reduction on product X (see appendix A). Key data extracted for the evaluation is as foll ows: interchange *Price Elasticity Calculation PriceQuantity DemandedPrice Elasticity $5.007 $4.5092.5 (absolute value) %?Q = (7-9) / ((7+9) /2)) = -2/8 = -.25 %?P = ($5.00-$4.50) / (($5.00+$4.50) /2)) = .50/$4.75 = .10 Elasticity = %?Q/%?P = -.25 / .10 = - 2.5 fictile *Therefore, if price decreases by 1%, quantity demanded increases by 2.5%. Given a price ginger nut coefficient of 2.5 and a 10% price decrease, expect a 25% increase in quantity demanded (%?Q/%?P=E; E (%?P)=%?Q; 2.5%(10%)=25%). *Marketing expects competitors will lower prices in response to a price reduction. General Management * borderline profit margin of 30% annually Accounting * under(a) elastic demand, given a 10% decrease in price and a 25% increase in quantity, fare gross sales revenue (TSR) will increase by 35% (%?TSR = %?P + %?Q = 25% + 10% = 35%). Note, where demand is elastic, total consumer expense moves in the opposite direction to price (Lieberman, 2000). The total sign up of consumer spending is also the... ! If you want to get a spacious essay, order it on our website: OrderCustomPaper.com

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