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An airline may also apply differential pricing to "the same seat" over time by discounting the price for early or late bookings and weekend purchases. This is part of an airline's strategy to segment price-sensitive leisure travelers from price-inelastic business travelers.
Pricing strategies and tactics vary from company to company, and also differ across countries, cultures, industries and over time, with the maturing of industries and markets and changes in wider economic conditions. [2] Pricing strategies determine the price companies set for their products. The price can be set to maximize profitability for ...
Where pricing is strategic, marketers develop an overall pricing strategy which is consistent with the organization's mission and values. This pricing strategy typically becomes part of the company's overall long-term strategic plan. The strategy is designed to provide broad guidance for price-setters and ensures that the pricing strategy is ...
A differentiation strategy is appropriate where the target customer segment is not price-sensitive, the market is competitive or saturated, customers have very specific needs which are possibly under-served, and the firm has unique resources and capabilities which enable it to satisfy these needs in ways that are difficult to copy.
A firm cannot charge a higher price if products are good substitutes, conversely as a product deviates from others in the segment producers can begin to charge a higher price. The lower non-cooperative equilibrium price the lower the differentiation. For this reason, firms might jointly raise prices above the equilibrium or competitive level by ...
Predatory pricing is a commercial pricing strategy which involves the use of large scale undercutting to eliminate competition. This is where an industry dominant firm with sizable market power will deliberately reduce the prices of a product or service to loss-making levels to attract all consumers and create a monopoly. [1]
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Yield management (YM) [4] has become part of mainstream business theory and practice over the last fifteen to twenty years. Whether an emerging discipline or a new management science (it has been called both), yield management is a set of yield maximization strategies and tactics to improve the profitability of certain businesses.