This is the amount of money charged for a good or service, This is the sum of value consumers exchange for the benefit of having or using a good or service. This is the market value of a product as it is offered in market.
FACTORS AFFECTING PRICING DECISIONS/FACTORS TO CONSIDER WHEN PRICING.
- Marketing objectives-a marketer must consider the marketing mix in terms of product design, distribution and promotion inorder to form a consistent and effective marketing programs
- Cost-consider the cost of production, cost of distribution and marketing expenses.
- Profit maximization-the management must consider profits expected before setting the final price.
- Organizational considerations-prices must always be set by management rather than by the marketing department/sales
- Market and demand for the product-a markter must understand the relationship between price and demand for the product(factors affecting demand).
- Environmental elements-prices must take into consideration the existing competitors prices.
- Prices of substitute goods.
- Intermediaries demands
- Suppliers-if an organization suppliers notice that prices of an organization products are rising,they may seek a rise in price of their supplies(inputs) to that organization
Inflationary conditions prevailing in the country
income effects of the consumers.
- Price is a means of regulating the economic activities ie keeping the economy in balance.
- Price has a considerable impact on consumer perception ie a marketer can either increase the price and emphasize on quality or lower the price and emphasize on bargaining.
- Price is one of the four pcs that can be changed quickly to respond to changes in the environment.
- Price determines the entire marketing strategies of a company
This gives the directions to the whole pricing process determining what your objectives are is he first step in pricing when deciding on pricing objectives, you must consider.
- Overall financial, marketing and strategic objectives of the company.
- Objective of your product/brand.
- Consumer price elasticity and price points.
- Resources you have available.
- Maximize long-run profit
- Maximize short run profit.
- Increase sales volume(quantity).
- Increase monetary sales.
- Increase market share.
- Obtain a target of return on sales.
- Stabilize market price.
- Ensure company growth.
- Maintain price leadership.
- To desensitize customers to price.
- Discourage new entrants into industry.
- Match competitor’s prices.
- Encourage exit of marginal firms from the industry.
- Survival in the market.
- Avoid government investigation/intervention.
- Obtain/maintain loyalty and enthusiasim of distributors and other sales personnel.
- To be perceived as fair by customers and potential customers.
- Social, ethical or ideological objectives.
STEPS INVOLVED IN PRICING PROCESS
A firm must set a price for the first time when the firm develops or acquires a new product, when it introduces its regular product into a new distribution channel/geographical area and when it enters its bid on new contract work.