Economics for Managerial Decision Making: Market Structure

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Economics for Managerial Decision Making: Market Structure

As legend and reality have it, Steve Jobs and Steve Wozniak started Apple Computer in a garage in Cupertino, Calif., in 1976. From those humble beginnings, and through extreme market swings, Apple Inc. has become the most valuable company in the world. “Given the company’s unbelievable innovation over the last few years, and the subsequent mountains of cash that it has earned as a result, the likely catalyst for the stock to eventually peak and decline will be Apple’s inability to continue to innovate at its current pace. Certainly, this is likely to happen at some point as the company confronts the burdens of stunning success in a relatively short period of time”
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This student believes that one of three strategies may be used, premium pricing, which a higher price is used, especially when a brand is considered to be unique or different, this type of pricing is used typically when a company is secure in that there is no comparison. Next, is penetration pricing, this is what is charged for products and services, this is usually a considerably lower price “in order to gain market share”. After this happens, the price is slowly increased. The third is economy pricing. This is an unusually low price, with this “the costs of marketing and promoting are kept at a minimum”, this is usually done with products that are turned into “store brands”. In the case of the Neuron there is no “store brand” or generic brand. Before the Ceres came out there was no comparison or competition for the Neuron. In this case this student feels it is in the best interest of Quasar to use the penetration pricing process. This will draw the consumer in, however Quasar cannot go so low that they are losing money, also Quasar does not want to get into a pricing war. Using the penetration cost along with non-pricing
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