PRICING

Contents 1) Meaning of pricing2) Forms of price3) Pricing objectives4) Discounts5) Allowances6) Types of costs7) Factor affecting pricing

Meaning of Pricing

Act of determining the exchange value between the purchasing power and utility

Determine exchange value such as setting the base price, determining discount and commissions

Formulating pricing objectives, policies and strategies

Forms of price Price is the value placed on what is exchanged.goods,services,ideas,advice,rights etc are exchanged and theier value are measured by their price. different exchange terms are used for price exchange transactions such as:1) interest2) rent3) fare4) tuition 5) premium6) salary7) commission8) toll9) postage10) bribe11) due

Pricing objectivesReflects the overall goals of organization Affects product, distribution and promotion decisionsDetermines he selection of pricing approaches and methods

Pricing objectives are of three categories. They are:1) Profit oriented objectives2) Sales oriented objectives3) Market et oriented objectives

Profit oriented objectivesProfit oriented objectives are set in terms of profit maximization and return on investment.

1) Profit maximization2) Return on investment

Sales oriented objectivesSales oriented pricing objectives are focused on increasing market share and sales volume.

Maintain or expand market share Increase sales volume

Status quo-oriented objectivesStatus quo oriented objectives are targeted at maintaining the current situation of the organization in the marketing place.

1 Survival2 Price stabilization3 Meet competition

Importance of pricing

It is performed by all types of organization like profit, on profit,governmentand non government. its importance is evaluated from the national and firms perceptive.

A. National perspectivePrice is a very important variable in the economy. Price affects both demand and saving. Price is one of the major activates of the government in am under developed economy.

1) Demand2) Savings3) Factors of production4) Government activity

Firms perspective Revenue and profits Competition Non price competition

DiscountsDiscounts are financial incentives provided to customers through price reductions.disconts are usually provided for an early payment, cash payment, cash purchase, volume purchase and off season purchase.

Cash discount Quality discount Trade discount Seasonal discounts

AllowancesAllowance are reductions in the list price to achieve a desired objective. Allowances are of two types. they are:

1 Promotional allowances2 Trade in allowances

Types of costThe marketing firm needs to understand how the various costs changes as the volume of production increases and decreases. they are mainly two types of cost in business operations

1) Fixed costs2) Variable costs3) Total cost

Factors affecting pricingPrice determination is affected by several internal and external factors. internal factors are controllable while external factors are mostly independent.

internal factors

Internal factors that affect pricing of a product are as follows:

1) Pricing objectives2) Marketing mix3) Structure for pricing4) Cost

External price factors The external factors are outside the influence of the marketer and include the following:

1 Market demand2 Prevailing market price3 Competition4 Government control5 Marketing intermediaries interest6 Social concerns

ANY QUIRIES?

References