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ne and manage pricing at three levels 10 Understand pricing profit lever In many cases, price is the most important determinant of changes in profitability。 ? A 1percent increase in price can lead to a substantial increase in profits。 ? The pricing profit lever is more powerful than other determinants of profitability, including volume increases and cost reduction。 ? Noheless, pricing is often undermanaged: – sometimes, price differentiation is perceived often mistakenly as being entirely illegal, and degrees of pricing freedom rare vastly underestimated。 – In addition, many panies believe that “ price simply cannot be managed” that pricing is set by the market or set by petition。 – Finally, panies underestimate the impact that pricing changes can have on their bottom line 。 For example, a 5percent price decrease might require as much as a 20percent volume increase to reach breakeven。 11 12 Determine and manage pricing at three levels Pricing means different things to different individuals and to different groups within every anization。 For example: ? 供給 /需求。 To an economist, price is a function of supply and demand。 At this level, the key issue is how current and future supply, demand, cost, and regulatory dynamics will affect overall industry price levels。 – Tool: scp, industry cost curves, demand analysis ? 產(chǎn)品 /市場(chǎng)戰(zhàn)略。 To a marketer, price is a