PRICE /PRICING

PRICE /PRICING

This is the amount of money charged for a good or service, This is the sum of value consumers exchange for the benefit of having or using a good or service. This is the market value of a product as it is offered in market.

FACTORS AFFECTING PRICING DECISIONS/FACTORS TO CONSIDER WHEN PRICING.

  • Marketing objectives-a marketer must consider the marketing mix in terms of product design, distribution and promotion inorder to form a consistent and effective marketing programs
  • Cost-consider the cost of production, cost of distribution and marketing expenses.
  • Profit maximization-the management must consider profits expected before setting the final price.
  • Organizational considerations-prices must always be set management rather than the marketing department/sales
  • Market and demand for the product-a markter must understand the relationship between price and demand for the product(factors affecting demand).
  • Environmental elements-prices must take into consideration the existing competitors prices.
  • Prices of substitute goods.
  • Intermediaries demands
  • Suppliers-if an organization suppliers notice that prices of an organization products are rising,they may seek a rise in price of their supplies(inputs) to that organization

Inflationary conditions prevailing in the country

income effects of the consumers.

IMPORTANCE OF RICING.

  1. Price is a means of regulating the economic activities  ie keeping the economy in balance.
  2. Price has a considerable impact on consumer perception ie a marketer can either increase the price  and emphasize on quality or lower the price and emphasize on bargaining.
  3. Price is one of the four pcs that can be changed quickly to respond to changes in the environment.
  4. Price determines the entire marketing strategies of a  company

PRICING OBJECTIVES

This gives the directions to the whole pricing process determining what your objectives are is he first step in pricing when deciding on pricing objectives, you must consider.

  • Overall financial, marketing and strategic objectives of the company.
  • Objective of your product/brand.
  • Consumer price elasticity and price points.
  • Resources you have available.

SPECIFIC OBJECTIVES.

  • Maximize long-run profit
  • Maximize short run profit.
  • Increase sales volume(quantity).
  • Increase monetary sales.
  • Increase market share.
  • Obtain a target of return on sales.
  • Stabilize market price.
  • Ensure company growth.
  • Maintain price leadership.
  • To desensitize customers to price.
  • Discourage new entrants into industry.
  • Match competitor’s prices.
  • Encourage exit of marginal firms from the industry.
  • Survival in the market.
  • Avoid government investigation/intervention.
  • Obtain/maintain loyalty and enthusiasim of distributors and other sales personnel.
  • To be perceived as fair customers and potential customers.
  • Social, ethical or ideological objectives.

STEPS INVOLVED IN PRICING PROCESS

A firm must set a price for the first time when the firm develops or acquires a new product, when it introduces its regular product  into a new distribution channel/geographical area and when it enters its bid on new contract work.

 

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