Describe what a firm wants to achieve through pricing, Corporate Finance

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Question:

(a) (i) Introduction and development- negative cash flows, low turnover, large overheads due to marketing expenses, marketing mix includes sales promotion.

- Growth- negative cash flows becoming positive, sales growing, profitability still low but increasing, marketing mix includes advertising.

- Maturity- cash cow, sales growing but at lower rate, profitability reached peak and starting to decline.

- Decline- sales falling, cash flow and profitability falling- either milk the product and delete from product range or use product-life extension strategies.

(ii) pricing objectives: goals that describe what a firm wants to achieve through pricing; form the basis for decisions about other stages of pricing; must be consistent with a firm's overall marketing strategy; can support the attainment of multiple short-term and long-term goals. (student needs to describe the pricing objective and the possible action.


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