Tqm Assignment7 Essay

792 Words4 Pages
1. What are pricing objectives that firms may pursue? Answer : 1) Profit-Oriented * Designed to maximize price relative to competitors' prices, the products perceived value, the firm's cost structure, and production efficiency. Profit objectives are typically based on a target return, rather than simple profit maximization. 2) Volume-Oriented * Sets prices In order to maximize dollar or unit sales volume. This objective sacrifices profit margin In favor of high product turnover. 3) Market Demand * Sets prices In accordance with customer expectations and specific buying situations. This objective is often known as "charging what the market will bear." 4) Market share * Designed to increase or maintain market share regardless of fluctuations in industry sales. Market share objectives are often used in the maturity stage of the product life cycle. 5) Cash Flow * Designed to maximize the recovery of cash as quickly as possible. This objective is useful when a firm has a cash emergency or when the product life cycle is expected to be quite short. 6) Competitive Matching * Designed to match or beat competitor's prices. The goal is to maintain the perception of good value relative to the competition. 7) Prestige * Sets high prices that are consistent with a prestige or high status product. Prices are set with little regard for the firm's cost structure or the competition. 8) Status Quo * Maintains current prices in an effort to sustain a position relative to the competition. 2. Explain four basic competitive market structures. Answer : 1) Perfect competition : * Perfect competition happens when numerous small firms compete against each other. Firms in a competitive industry produce the socially optimal output level at the minimum possible cost per unit. 2) Monopoly : * A monopoly is
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