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Customer oriented or perceived value pricing
There is an increasing trend to price the product on the basis of the customer's perception of its value. This method takes into account all other elements of the marketing mix and the positioning strategy of the firm as the value of the product is a function of all these variables. This method helps the firm in reducing the threat of price wars.
In fact, it can help the firm steer out the ugliest of price wars. But the key to this method is to correctly understand customer's perception of product value and not to overestimate the firm's product value. Marketing research can play an important role here.
Ordering Costs These are incurred in getting purchased items into the company’s inventory or stores, and usually consist of clerical costs of: • Making the purchase demand.
Calculation
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full explaination with diagram
2x2+8x-m3 = 0
Advantages of Value Added Statements 1) Managers might be in a better position to control their organizations own inputs than the cost and usage efficiency of purchased materia
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