1. Pricing Products Meaning and use of price
The amount of money a seller is willing to accept in exchange for a product at a given time and under certain circumstances
Price allocates goods and services among those who are willing and able to buy them
Price allocates financial resources (sales revenue) among producers according to how well they satisfy customers’ needs
Price helps customers allocate their own financial resources among various want-satisfying products
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2. Pricing Products (cont’d)
Supply and demand affects prices
Supply
The quantity of a product that producers are willing to sell at each of various prices
Quantity supplied by producers increases as the price increases
Demand
The quantity of a product that buyers are willing to purchase at each of various prices
Quantity demanded increases as the price decreases
Equilibrium
Where the supply and demand curves intersect and quantity and price for buyers and sellers are equal
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3. Supply and Demand Curves
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4. Pricing Products (cont’d)
Price and nonprice competition
Price competition
An emphasis on setting a price equal to or lower than competitors’ prices to gain sales or market share
Nonprice competition
Competition based on factors other than price
Buyers’ perceptions of price
Buyers will accept different ranges of prices for different products
A premium price may be appropriate if a product is considered superior or has inspired strong brand loyalty
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