SURVIVAL

1. * Most executives pursue strategies that align pricing with revenue generation, enabling
their organizations to survive and thrive long term.
2. * Firms rely on price to cover the costs of production, pay expenses, and provide the
profit incentive necessary to continue to operate the business. These factors help an organization
survive.
* Most managers pursue strategies that enable their organizations to continue in operation for
the long term. Thus, survival is one major objective pursued by company executives.
* For a commercial firm, the price paid by the buyer generates the firm’s revenue. If revenue
falls below cost for a long period of time, the firm cannot survive. Survival is closely linked to
new product development, profit, sales, market share, and image.

C U R R E N T P R O F I T M A X I M I ZAT I O N

* Usually the objective of any business is to maximize the profit. During short run,
a firm can earn maximum profit by charging high price. However, during long run,
a firm reduces price per unit to capture bigger share of the market and hence earn
high profits through increased sales.

* In economics, profit maximization is the short run or long run process by which a
firm determines the price and output level that returns the greatest profit

* Profit maximization can increase a company’s gains in the short term, but over
the long run it can have negative repercussions for employees, owners and
community stakeholders. When using a profit-maximizing strategy, management’s
focus is solely on increasing bottom-line profit, which is not the same thing as
maximizing shareholder wealth. Besides increasing revenues, a company can
address other areas of the income statement to maximize profits.
 MARKET SHARE LEADERSHIP
 * MARKET SHARE- increasing market share is one of the most important
objectives of business and pricing may offer a mechanism to increase share.
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 * If the firm’s objective is to obtain a big market share, it keeps the price per unit
low so that there is an increase in sales.
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 * Market leadership is the position of a company with the largest market share or
highest profitability margin in given market for goods and services. Market share
may be measured by either the volume of goods sold or the value of those goods.