What Is Price, And Why Is It Important For A Firm?

1807 Words8 Pages
Chapter 10 1. What is price, and why is it important to a firm? What is digital currency such as the bitcoin? - Price is the assignment of value of a product or service. Not only paid with currency, but in multiple manners these could consist of digital money such as the “bitcoin”. The bit coin has merged in to financial market and many firms are starting to use this type of virtual currency. These currencies cannot be controlled by one party (government) that is why it has been such a controversial issue. 2. Describe and give examples of some of the following types of pricing objectives: profit, market share, competitive effect, customer satisfaction, and image enhancements. - In order for a firm to maximize their customer…show more content…
3. Explain how the demand curves for normal products and for prestige products differ, what are demand shifts and why are they important to marketers? How do firms go about estimating demand? How can marketers estimate the elasticity of demand? - Normal products are categorized as products whose value is lower than prestigious products, they both assume a role in the market as they are targeted to different market segments. Demand curves differ as both products may be perceived differently, typically normal products are perceived as lower quality contrary to prestigious products whose customers perceive them as higher quality products. Ultimately, they differ in the perception of the customer as each product is categorized according to their price, and higher priced products may be perceived as better. An example could be represented by two different vehicle manufacturers; Honda, and BMW, Honda is a low priced vehicle known for reliability fuel efficiency, etc.… BMW are known for their luxury, and price. Here their demand may differ as they both have different target markets. Perhaps if Honda decided to raise their price, they would more than likely lose profit, but if BMW was to lower their price, their demand would potentially increase. These changes are known as demand shifts here a firm identifies the traits of each shift, and can identify the relationship in demand. Moreover, marketers can estimate their product demand. This is done by one;
Open Document