Prices and decisions

Trimis la data: 2014-08-05 Materia: Marketing Nivel: Facultate Pagini: 9 Nota: / 10 Downloads: 0
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Price is the "value" that is exchanged for products in marketing transactions. Price is not always money paid; barter, the trading of products, is the oldest form of exchange .Price is the key element in the marketing mix because it relates directly to the generation of total revenue. The profit factor can be determined mathematically by multiplying price by quantity sold to get total revenues and the subtracting total costs. Price is the only variable in the marketing mix that can be adjusted quickly and easily to respond to changes in the external environment.

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.

Factors

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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