Pricing objectives Did You Mean Pricing?

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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 long-run profit
maximize short-run profit
increase sales volume (quantity)
increase dollar sales
increase market share
obtain a target rate of return on investment (ROI)
obtain a target rate of return on sales
stabilize market or stabilize market price: an objective to stabalise price means that the marketing manager attempts to keep prices stable in the marketplace and too 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.
company growth
maintain price leadership
desensitize customers to price
discourage new entrants into the industry
match competitors prices
encourage the exit of marginal firms from the industry
survival
avoid government investigation or intervention
obtain or maintain the loyalty and enthusiasm of distributors and other sales personnel
enhance the image of the firm, brand, or product
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"
build store traffic
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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