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Essay / Research Paper Abstract
This 5 page paper discusses the different consideration that need to be made when a company considers changing the price of a good to increase revenue. The paper looks at price elasticity, the impact of competing and complimentary goods and the risks of pricing changes. The bibliography cites 8 sources.
Page Count:
5 pages (~225 words per page)
File: TS14_TEpricedec.rtf
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Unformatted sample text from the term paper:
range of pricing theories exist, but as time goes by and a product is on the market the different influences may change and the goals of the organization may also
change. If we consider the case of a fast food chain, such as Burger King, the company, or a franchise, may need to increase sales and increase revenue. If sales
have been falling and there is the desire to increase the sales and the lost profit the company may consider changing the price of the goods they sell, or changing
the price of one key product as this may also influence other sales. For example, if the company can sell more burgers they are also likely to increase the sales
of the complimentary items, such as the fries and the rinks. In this case we will assume there has been a fall in sales and Burger King was to increase
sales and increase their overall revenue and profit. The alteration of prices may be seen as an opportunity to increase revenue. We will assume that the company is considering decreasing
the process of the burgers in order to get more people into the restaurants. They hope that by increasing the level of sales they can increase the profit with less
made on each individual sale, but making up for the lower profit per unit with a larger number of units sold. Hey also want to increase the sale of other
items and try and create a habit and loyalty in the customers coming into the branch so that there are long term benefits. The first consideration needs to be
that of price elasticity. Generally speaking as the price for a good falls the demand will increase, as the price for a good increases the demand will fall. For
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