PRICING DECISION

- KRUPA SHAH

PRICING DECISION
Price is base of entire marketing system. It means the expression of value or utility in terms of money. It needs calculations plus study of market situation appropriate judgement on the part of marketing managers.

Marketing Objectives
PAYING CAPACITY The capacity of consumer is estimated. Current Profit Maximization Choose the Price that Produces the Maximum Current Profit, Etc.
PRICE STABILISATION To maintain stable price over a long period of time considering various flexible factors Product Quality Leadership High Prices to Cover Higher Performance Quality.

Marketing Objectives

Factors Affecting Price Decisions

Internal Factors
Marketing Objectives Characteristics of product, Promotion of a product, Cost of production

External Factors

Pricing Decisions

Characteristic of customer Competition Economic function (boom N recession)

New Product Pricing Strategies

Market Skimming
Setting a High Price for a New Product to Skim Maximum Revenues from the Target Market. Results in Fewer, But More Profitable Sales.

Use Under These Conditions:

Products Quality and Image Must Support Its Higher Price. Costs Cant be so High that They Cancel the Advantage of Charging More. Competitors Shouldnt be Able to Enter Market Easily and Undercut the High Price.

New Product Pricing Strategies

Use Under These Conditions:

Market Penetration
Setting a Low Price for a New Product in Order to Penetrate the Market Quickly and Deeply. Attract a Large Number of Buyers and Win a Larger Market Share.

Market Must be Highly Price-Sensitive so a Low Price Produces More Market Growth. Production/ Distribution Costs Must Fall as Sales Volume Increases. Must Keep Out Competition & Maintain Its Low Price Position or Benefits May Only be Temporary.

Cost plus pricing:

Under this price method,the average cost of production and marketing is calculated first.
A certain percentage of profit is also added and price per unit is fixed.

THANK YOU !!!!!