Other Internal and External Considerations Affecting

Price Decisions
Beyond customer value perceptions, cost, and competitor strategies, the company
must consider several additional internal and external factors.

Internal factors affecting

pricing include the
company’s overall External factors include
Pricing
marketing strategy, the nature or the market
objectives and Decisions and demand and other
marketing mix as well environmental factors.
as other organizational
considerations.
 Other Internal and External Considerations
Affecting Price Decisions
Overall Marketing Strategy, Objectives, and Mix

 Price is only one element of the company’s broader marketing strategy.

• So, before setting price, the company must decide on its overall market
strategy for the product or service.
• Sometime, a company’s overall strategy is built around its price and value
story.
 For example, grocery retailer
Trader Joe’s unique price value
positioning has made it one of
the nation’s fastest growing,
most popular food stores.
 Overall Marketing Strategy, Objectives, and Mix

Pricing objectives
Pricing may play an important role in helping to accomplish company objectives
at many levels:

 A firm can set prices to attract new customer or profitably retain existing
ones.
 It can set prices low to prevent competition from entering the market or set
prices at competitor’s levels to stabilize the market.
 It can price to keep the loyalty and support of resellers or avoid government
intervention.
 Price can be reduced temporarily to create excitement for a brand
 Overall Marketing Strategy, Objectives, and Mix
 Price decisions must be coordinated with product design, distribution, and
promotion decisions to from a consistent and effective integrated marketing
mix program.
 Positioning may be based on price.
 Price is a crucial product positioning factor that defines the product’ market,
competition, and design.
 Non- price positions can be created to differentiate the marketing offer.
Overall Marketing Strategy, Objectives, and Mix

Target costing
 It starts with ideal selling price based on customer value considerations and
then targets costs that will ensure that the price is met.
o Many firms support such price positioning strategies with a technique
called “target costing”.

Thus, marketers must consider the total marketing strategy

and mix when setting price.