1.

Managers must choose a price that is equal to the perceived worth of target consumers
to make a profit. If a price is set too high in the minds of consumers, the perceived value
will be lower than the cost, and sales opportunities will be lost. Marketing managers
must be aware of the consumer's willingness to pay as well as their value perception.

2. Price allocates goods and services by ensuring that they reach people who can afford
and want them, ensuring that the right product is promoted to the right demographic.

3. Companies may not maximize profits due to charity, long-term profit maximizing over
short-term profit maximization, and corporate social responsibility, all of which play a
role in achieving a company's long-term objectives.

4. Price is determined in several ways by supply and demand. When there is a low supply
and a strong demand for a product or service, the price will rise since resources are
scarce and everyone wants to buy it. When supply is plentiful, but demand is likewise
plentiful, the same can be said. As a result, businesses become price makers. Price falls
when supply is great, and demand is low. Companies cannot afford to boost the price of
non-selling items or services. When supply and demand are both low, the same can be
asserted. As a result, the consumer is the one who sets the price.

5. The term "elastic demand" refers to a situation in which customer demand shifts in
response to price fluctuations. Inelastic demand suggests that a price increase or drop
has a negligible effect on demand for the product. Highly elastic products/services are
typically higher-priced items that consumers do not need. Prices may vary, which will
have an impact on consumer behavior. Products and services that are inelastic are likely
to be needed, such as gas. People have no choice but to use the goods or services, so
they pay for what they must. These businesses are the ones who set the prices.

6. Yield management systems use the most profitable return in supply and demand to
maximize profit at each stage of selling and marketing. Airlines are a good example since
if you do not book a flight ahead of time, you will be overcharged if you do so within a
few days. Furthermore, once they have seated as many people as possible, they will
lower the price to fill up their whole supply for that flight.
 7. Companies are adopting yield management systems because it is the most efficient
strategy for maximizing profit. One of the company’s primary goals is to have the
highest recurring profit and this strategy is important for that.

8. It is important to understand where the breakeven point is since that is where we stop
losing money and start making money. This is a good place to start when deciding on
pricing. The inability to predict demand for a good or service before it appears on the
market is a disadvantage of pricing based on breakeven points. As a result, our
breakeven point may not be accurate, and we may end up with a loss rather than a
profit.

9. Three categories of pricing objectives are:

 Profit oriented
Price oriented has both direct and indirect effects on the profit, the direct effect relates to if the
price covers the cost of producing a product, Price affects profit indirectly through influencing
the units sold. An example of profit oriented is profit maximization and returns target.

 Sales-oriented
Sales-oriented pricing objectives seeks to boost the volume or the market share, volume
increase is measured against organizations own sales across a specific time periods and
organizations market share measures its sales against sales of other organizations in the
industry hence volume and market share are not dependent of each other since a change in
one does not necessarily spur the change in the other. An example of sales-oriented is a growth
in market share.

 Status Quo
A status quo price objective is a tactical goal which encourages competition on factors other
than the price, it usually focuses on maintaining market share. An example of Status Quo is
meeting competition.