Objective of pricing decision, Marketing Management

Objective of pricing decision: a firm may choose its pricing objectives from any of the following:

1. To maximize the profits: the primary objective of the pricing decision is to maximize profits for the concern and therefore pricing policy should be determined in such a way so that the company can earn the maximum profits.

2. Price stability: as far as possible the prices should not fluctuate too often. A stable price policy above can win the confidence of the consumers. It will also add to the goodwill of the firm. For this purpose the concern should consider long run and short run elements.

3. Competitive situations: one of the objectives of the price decision is to face the competitive situation in the market. Prices of the commodities should be fixed keeping in the mind the competitive situation. Sometimes the management likes to fix a reactively low price for its product to discourage potential competitors.

4. Achieving a target return: this is a common objective of well established and reputed firm in the market (either for the companies name or its brand or the quality of the product) to fix a certain rate of return on investment. The prices of the product are so calculated as to earn that rate of return on investment. Different target return may be fixed for different product but such returns should be related to a single overall return target.

5. Capturing the market: one of the objectives of pricing decision may be capturing the market. A company especially a big company, at the time of introducing the product in the market fixes compatibly lower prices for its products, keeping in view the competitive position with an objective of capturing a big share in the market.

6. Ability to pay: price decision is sometimes taken according to the ability to customers to pay; more prices can be charged from persons having a capacity to pay. Capacity to pay is determined on the basis of the purchasing power of the consumers for which the product is made.

7. Long run welfare of the firm: the main aim of some concerns is to fix the price of the product which is in the best interest of the firm in the long run keeping the market conditions and economic situation in mind.

8. Margin of profit to middle men: pricing of the product should be made keeping in view that middle man get a fair return on the sale of company's product. Otherwise they will lose interest in selling company's products.

Posted Date: 9/19/2012 6:56:27 AM | Location : United States

Related Discussions:- Objective of pricing decision, Assignment Help, Ask Question on Objective of pricing decision, Get Answer, Expert's Help, Objective of pricing decision Discussions

Write discussion on Objective of pricing decision
Your posts are moderated
Related Questions
What is the role of personal selling in presentation and demonstration?

Sales force management : as a general rule, rural marketing involves more intensive personal selling effort compared to urban marketing. Rural marketing calls for some specific

QUESTION Briefly discuss the three major steps in target marketing Suppose you are going to purchase a mobile phone, explain how you would apply the three levels of produ

Illustrates the working of second barrier of exchange in channels distribution? The second barrier to smooth exchange procedure arises due to time of production and the time at

Explain about the annual plan control in MIEV. Annual plan control: This manuscript includes all the governments numerical goals and managerial objectives. This is in fac

1.Considering the concept of product life cycle, where would you put video games in their life cycle? 2. Should video game companies continue to alter their products to include oth

why we need to study promotion in marketing?

Penetration Pricing This term is refers to a pricing strategy that dictates that the price of an item being introduced into a market should be set as low as possible to develop

what are the core marketing concepts?

Explain about the measuring of retaining customers. The measure of retaining customers is given below: Cost of losing a Customer: Attracting customers is of no employ unle