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Meaning

Economists defines price as the exchange value of the product or service always
expressed value of the product or service always expressed in money. Price is the
mechanism or device for translating into quantitative terms ( rupees & paisa) the
perceived value of the product to the customer at the point of the time .
Importance of Pricing
Price is a matter of vital importance to both the seller and the type buyer in the
market place .n money economy! without prices there cannot be marketing. n money
economy! without prices there cannot be marketing.
Price regulates business profits! allocates the economic resources for
optimum production and distribution.
"hus price is the prime regulator of production! distribution and
compositions of goods.
Price influences consumer purchases decision.
t can determine the general living standards.
"he most important marketing variables influenced by pricing decisions
are
#. $ales volume
%. Profit margins
&. 'ate of return on investment
(. "rade margins
). *dvertising and sales promotion
+. Product mage
,. -ew product development.
"herefore! pricing decisions play a very important role in the design of the
marketing mix.
Significance of the price factor:-
"he selling price plays a unique role in because of the price level ./
0ontrols the sales volume and the firm1s market share.
2etermines the total sales revenue ( $ales revenue 3 $ales 4olume unit price )
'egulates the rate of return on investment ('5) and through '5 price in
influences sales profitability.
0reates an impact on unit cost in mass production.
6enry 7ord 85ur policy is to reduce the price extend operations and
improve the product 8
"hese are the significance or important of 9Pricing 9.
Objectives of Pricing
Probable pricing Objectives
Pricing
Profit 0entered $ales 5riented $tatus :uotas


;rowth ;rowth in <aintaining
n $ales <arket $hare <arket $hare
<aximi=ation of "arget *voiding or <eeting -on / Price
Profits '5 0ompetition 0ompetition


* variety of ob>ectives may guide pricing 2ecisions
#. ;rowth in sales
%. <arket $hare
&. 'eturn on nvestment or Pricing for "arget 'eturn ( '5)
(. <eeting 0ompetition or Preventing 0ompetition
). Profit maximi=ation
+. $tabili=ed Price
,. 0ustomer1s ability to pay
?. 'esource <obili=ation
@. 0ontrol 0ash flow.
1. Growth in sales
* low price can achieve the ob>ective of increase in sales volume. * Aow Price is
-ot always necessary. * right price can stimulate the desired sales increase.
%. <arket $hare
Price is typically one of those factors that carry the heaviest responsibility for
improving or maintaining market share a sensitive indicator of customer & trade
acceptance.
&. 'eturn on nvestment or Pricing for "arget 'eturn ('5)
7rom the point of view of investors! principle pricing goals is to achieve the
expected profits the profit must compensate the investment made.

(. <eeting 0ompetition or Preventing 0ompetition
"he pricing ob>ective may be to meet or prevent competition. Bhile fixing
the price of similar products produced by other firms will have to considered
). Profit <aximi=ation
Cusiness of all kinds is run with an idea of earning profit at the maximum.
Profits maximi=ation can be en>oyed where the monopolistic situation
exists ."he goal should be to maximi=e profits on total output! rather than
on every item
+. $tabili=ed price
t is a long term ob>ective and aims at preventing frequent and violet
fluctuations in price. t also prevents price wave amongst the competitors.
Bhen the price often changes these arises no confidence in the product.
,. 0ustomer1s *bility to pay ./
"he price that charged differs from person to person! *ccording to his
ability to pay. 7or instance! railways charge fare according to the capacity
of the passengers! "he policy is otherwise known as 8 what the traffic will
bearD.
?. 'esource <obili=ation./
Ender this ob>ective! the products are priced in such a way that sufficient
resources are made available for the firms expansion.
@. 0ontrol 0ash flow ./
* principal pricing ob>ective is to return cash as much as possible ( the
fund invested ) within a given period .
Pricing Strategies & Stations:-
* firm may choose varies kinds of pricing polices for their products. * few
important one are explained below./
#. 5dd pricing
%. Psychological Pricing
&. Prestige pricing
(. 0ustomer Pricing
). ;eographic Pricing
+. Price lining
,. 2ual Pricing
?. *dministered pricing
@. <onopoly Pricing
#F. Penetration Pricing
##. -egotiated Pricing
#%. <ark up Pricing
#&. $hield Cid Pricing G 0ompetitive Cidding
#(. $kimming Pricing G $kim the 0ream pricing