1University of Technical Education University of Sunderland HO CHI MINH CITY 200Cha!ter "02OUT#INE"$ %efinition2$ &ricin' !olicy($ &ricin' strate'y )$ *!!roaches to !ricin'3"$ %efinition&ricin' decisionsMa+i,isin' !rofitsMaintainin' or increasin' ,ar-et share&ricecanbedefinedasameasureofthe valueexchangedbythebuyerforthevalue offered by the seller.4Costs and !rofitsE.ualsCOSTSRaw materials Machinerywearing outProductionAdministrationelling!istributionSE##IN/&0ICE%ESI0E%&0O1IT"lus#$ost%"rice model&Ele,ents of cost'herearedifferentwaysofanalysingand classifying cost !irect costs and indirect costs (unctional costs (ixed costs and variable costs $ontrollable and uncontrollable costs)* 1* 2*uantity'raditional "rice elasticity&rice elasticityP 1P 2Price+&rice elasticity 2 chan'e in sales de,and2 chan'e in sales !rice,lasticity -1 % .f the "rice is lowered/ total sales revenue will rise.% .f the "rice is raised/ total sales revenue will fall,lasticity 01 1inelastic2% .f the "rice is lowered/ total sales revenue will fall.% .f the "rice is raised/ total sales revenue will go u"3*ctivity4hatarethelimitationsof"rice elasticityasafactorindetermining "rices562$ &ricin' !olicyPrice"olicyistheoutcomeof managementdecisionsabout"rice whichderivefrominternalo"erational considerationsaboutcostsand external/customerfocused consideration about value.17&ricin' issues8obody will buy above this levelMa9ing an a""ro"riate "rofit considering the o""ortunity cost and investment$onsidering the needs and wants of the target mar9et and its "erce"tions of the "roduct$onsidering the "rices and characteristics of com"etitive offerings$overing the cost ofdevelo"ing a "roductsuitable for the mar9et'he su""lier will not sellbelow this levelMa+i,u, !rice:rganisationalandmar9etissuesMini,u, !rice11($ &ricin' strate'y Price and "romotion Price strategy and the mar9eting mix Pricing and the com"etitive edge 1"rice war2123irtuous circle of !rice4 !rice$value cycleRaise "rice;ower volume/ but higher revenue from better margins