Prices and decisions
Pricing objectives are overall goals that describe the role of price in a firm's long-range plans. The most fundamental pricing objective is the organization's survival. Price can be easily adjusted to increase the sales volume or to combat competition so that the organization can stay alive .Profit objectives, which are usually stated in terms of sales dollar volume or percentage change, are normally set at a satisfactory level rather than at a level designed for profit maximization.
A sales growth objective focuses on increasing the profit base by increasing sales volume. Pricing for return on investment (ROI) has a specified profit as its objective. A pricing objective to maintain or increase market share implies that market position is linked to success. Other types of pricing objectives include cash flow and recovery status quo and product quality.
Eight factors enter into price decision making:
1. Organizational and marketing objectives: When setting prices, marketers should make decisions consistent with the organization's goals and mission.
2. Pricing objectives: Pricing objectives heavily influence price-setting decisions.
Costs: Most marketers
Channel member expectations: The revenue that channel members expect for their functions must be also considered when making price decisions. Buyers' perceptions: Buyers' perceptions of price vary. Some consumer segments are sensitive to price, but others may nor be; thus before determining price, a marketer needs to be aware of its importance to the target market.
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