FPT UNIVERSITY

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ASSIGNMENT

Major: INTERNATIONAL BUSINESS

SUBJECT: MARKETING101
(Font Times New Roman, size 18, in

(TOPIC)
The internal and external factors affecting a firm's pricing
decisions.
Student full name: : Nguyen Thi Van Anh
Student ID : HS173160
Class : IB1708
Teacher : Le Thi Viet Ha

Hanoi, June 2022

Typically, corporations will determine the pricing of a product
based on the overall expenses incurred during manufacturing,
including labor costs, space leasing prices, etc. so that there is no
loss for the business. There are some companies that will directly
reference the prices of their competitors (which may be more or
less expensive). In almost all firms, both internal and external
variables have a role in establishing a product's pricing.

About the internal factors that affect the price. The factors over
which the organization has control are internal. First, the
marketing team and the manufacturing team are involved in price
considerations. This cost includes fixed and variable costs. The
marketing department will think about the product's marketability,
target market suitability, etc. The manufacturing team, on the
other hand, will think about the expenses of production and the
plan for launching the product. Additionally, the ultimate pricing
will take into account both the production and the marketing
team's viewpoint. The second is the Marketing Mix strategy.
Marketing mix are product, price, promotion and place. A slight
change in price can affect the whole promotion and distribution of
the product in different places. Show that price is the most
important element of the Marketing Mix strategy. Some
companies will offer discounts like sales up to 50% or Black
Friday. It is in fact part of their marketing strategy to attract the
attention of guests who are price conscious or have a low
willingness to pay. Meanwhile there are also other companies that
raise prices as part of their marketing strategy. Price often comes
with quality. As the saying "Cheapest is dearest." of our ancestors.
The fact that customers are willing to pay a high price if they see a
better, more valuable product. The third thing is about goals.
Every company will have goals, such as increasing revenue,
increasing market share, productivity, etc. The pricing is also to
fulfill the short and long term goals of the company. And
advertising also needs to have goals. Every company will invest
some money to advertise through TV, social media, KOLs or
outdoor LED screens to reach customers. And to successfully
attract attention, in addition to advertising they must also establish
and differentiate their products and brands from their competitors.
For example, advertising of green electronics, they did a great job
in this, dividing goods, eye-catching ads, promotions, ..

External factors are beyond the direct control of the organization,

so they must be continuously adjusted and preventive measures
taken. The first is about the customer's awareness, which is crucial
for both internal and external issues. Sensitivity of the customer to
price fluctuations. Through the company's market research, it can
determine whether the client would accept that pricing. Price
flexibility is greater for durable products like TVs and
refrigerators than for essentials. When prices are lower, people are
more inclined to buy, and when prices are higher, they are less
likely to buy. The second, price strategies are affected by several
variables, including manufacturing costs, the kind and intensity of
demand, and rival pricing. Usually, all three factors combine to
form the ultimate cost. For instance, when a new product is
introduced, its advertising expenses may be quite costly since
consumers must be made aware of it. As a result, the price of a
product might vary depending on its offering stage in its life cycle.
Next is the competitors. What competitors set prices will have a
great influence on a company's pricing decisions. For example,
when you go to buy a computer, you see that the computer at FPT
sells for 23 million dong but in another store they sell it for 18
million dong, what will you do? Because companies want to retain
customers, they will often sell at prices that match their
competitors. Some retailers, such as Home Depot, will give you an
extra discount or like big C even free it if you find the same
product for a lower price elsewhere. Similarly, if you see a store
that has an online ordering service, you will realize that another
store will also have it (in this age of technology). The same is true
of customer needs, for products that do not have substitutes, they
will accept increased prices. Regarding distributors, the company
will divide the prices among different distributors, which can
create a KPI meeting for distributors' efforts. For example, the
target is to pick up 1 billion dong, the next time you pick up the
goods, you will get a 5% discount. Therefore, it is necessary to
have a suitable price with the right distributors. The last factor is
the regulatory and legal factor. Governments can utilize a variety
of regulatory tools to manage pricing in order to safeguard
consumers, foster competition, and encourage moral and just
economic practices. The Robinson-Patman Act, for instance,
restricts a seller's ability to charge various prices to various clients
for the same goods. This move serves to safeguard small
companies against larger corporations that compete with them by
offering discounts and other special deals. However, this results in
enterprises suffering significant losses. Unfair trade regulations
safeguard smaller firms by requiring sellers to maintain a
minimum price for comparable goods.

Those are all factors that influence pricing. After researching, I

realized that pricing turned out to be not simple and very
complicated. In order to get a desired price, companies have to go
through the steps, the problems can affect, not to mention that if
the marketing is not right, it can cause the product to disappear
from the market. Product sorting is also essential if not like
Colgate's frozen food business. Due to the naming of the product,
customers have no desire to experience the toothpaste product. In
the end it's a business with good valuations that equates to a good
grasp of the influencing factors.
Reference:
https://onlinemkt.org/pricing-method/
https://open.lib.umn.edu/principlesmarketing/chapter/15-2-factors-
that-affect-pricing-decisions/