Page 238 - DECO101_MICRO_ECONOMICS_ENGLISH

Unit 14: Pricing Decisions

4. Examine the benefits of using full cost pricing methods vis-à-vis its shortcomings. Notes
5. Discuss the two main competition based pricing methods.
6. Suppose you are a businessman whose objective is to capture larger market share as soon
as possible. Which type of pricing method will you use and why?
7. Bring out the difference between price skimming and penetration pricing. Use suitable
examples.
8. Analyse the rationale for using psychological pricing method.
9. Identify and discuss the techniques to be used if you want to induce your customers to buy
early.
10. Differentiate between going rate pricing and customary pricing.
11. Which pricing method do you think is most suitable under conditions of high competition

and insignificant individual market shares?
12. You are a businessman producing shirts. You enjoy a fair amount of market share and
huge profits. But in recent years, another manufacturer has come up in the market and

is threatening to eat up your market share. What type of pricing strategy would you use
under such a situation?

Answers: Self Assessment

1. Market Skimming 2. Full cost pricing

3. Going rate 4. Psychological
5. Law of Demand 6. True
7. True 8. True
9. False 10. True

14.8 Further Readings

Books Dr. Atmanand, Managerial Economics, Excel Books

G.S. Maddala, Microeconomics: Theory and Application, Tata McGraw-Hill
Jeffrey M. Perloff, Microeconomics, Pearson Education

Sampat Mukherjee, Microeconomics, Prentice Hall
Samuel Bowles, Microeconomics: Behavior, Institutions, and Evolution, Oxford

Online links http://entrepreneurs.about.com/od/salesmarketing/a/pricingstrategy_2.htm

http://marketingteacher.com/lesson-store/lesson-pricing.html
http://www.articlesbase.com/answers/what-are-the-various-pricing-meth-
ods-46421
http://www.pricingstrategy.net/

LOVELY PROFESSIONAL UNIVERSITY 233