ABSTRACT
After deciding which segment(s) to target, the producer must decide what price to charge its customers. Determining the right price is by no means a perfect science. First of all, different philosophies exist as to what constitutes a fair price. While there is complete agreement that the price offered must cover the cost of the product and return a prot to the producer to compensate for the risk incurred, the difculties arise when discussing how high the realized prot should be. Athletic shoes cost pennies to make, a few dollars to advertise, and yet retail for hundreds of dollars. With a such a high rate of return surely, some argue, shoe manufacturers are abusing their market power and charging too high a price. That perspective ignores that consumers will pay a premium for branded and high-quality goods. And because of technology, it is possible to charge a different price depending on the brand loyalty of the customer.
