Managing Finance assignment 3 Essay Example | Topics and Well Written Essays - 2000 words

Managing Finance assignment 3 - Essay Example 2. Penetration pricing- Penetration Pricing: The strategy of setting a products price relatively low in order to generate a high sales volume. The strategy is commonly associated with pricing new products that do not have identifiable price-market segments. It is used to secure rapid penetration of a market. . This is the strategy use by many Chinese companies. It priced its products very much than its Western counterparts and it is making a head way for a quite number of computer products. 3. Profit Maximization - In economics, profit maximization is the process by which a firm determines the price and output level that returns the greatest profit.. Hence, based on the above concept. The strategy requires the price combinations that would yield the highest profit. Hence, a company can use this to have higher profits. Directly or indirectly this is used my many food business like Jollibee food chains. If one enters an outlet one would observe packaging their meals into different combinations of food items. Such strategy is profit maximization. 4. Competitor indexing. It is a price setting technique used by marketers. Generally, it involves using the price of competitors products in determining the price of your own products. Its main advantage is ease of use. Extensive marketing research and statistical analysis are not required 5. Target rate of return pricing- It is a pricing method used almost exclusively by market leaders or monopolists. You start with a rate of return objective, like 5% of invested capital, or 10% of sales revenue. Then you arrange your price structure so as to achieve these target rates of return.