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Pricing objectives or goals give direction to the whole pricing process. Determining what your objectives are is the first step in pricing. When deciding on pricing objectives you must consider: 1) the overall financial, marketing, and strategic objectives of the company; 2) the objectives of your product or brand; 3) consumer price elasticity and price points; and 4) the resources you have available.
Some of the more common pricing objectives are:
maximize short-run profit
increase sales volume (quantity)
obtain a target rate of return on sales
stabilize market or stabilize market price: an objective to stabilize price means that the marketing manager attempts to keep prices stable in the marketplace and to compete on nonprice considerations. Stabilization of margin is bascially a cost-plus approach in which the manager attemptes to maintain the same margin regradless of changes in cost.
maintain price leadership
desensitize customers to price
discourage new entrants into the industry
encourage the exit of marginal firms from the industry
avoid government investigation or intervention
obtain or maintain the loyalty and enthusiasm of distributors and other sales personnel
be perceived as “fair” by customers and potential customers
create interest and excitement about a product
discourage competitors from cutting prices
use price to make the product “visible"
help prepare for the sale of the business (harvesting)
social, ethical, or ideological objectives
get competitive advantage
See also: marketing, pricing, strategic planning, price
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