Do you handle pricing and price competition well?
32 An external issue to be considered when setting a price is a Total demand for from ACCTG 211 at Pennsylvania State University. ... 32 an external issue to be considered when setting a. ... Course Title ACCTG 211; Type. Test Prep.
What are the factors to consider when setting a price?
86 An external issue to be considered when setting a price is A the quality of. 86 an external issue to be considered when setting a. School University of Houston; Course Title ACCT 1021; Type. Homework Help. Uploaded By qq798455342. Pages 3 This preview shows page 2 - …
What are external factors that affect pricing decisions?
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External Environmental Analysis Page 8 • Pricing strategies could be either: -Penetration price: setting a low price to gain market share. -Price skimming: setting a high price to gain maximum benefit in the initial stages. Growth stage • Awareness of product increases. • Demand levels increase. • Market as a whole grows.
What factors should be considered when setting prices?
Factors to Consider When Setting Prices. In the narrowest sense, price is the amount of money charged for a product or service. More broadly, price is the sum of all the values that consumers exchange for the benefits of having or using the product or service. Price is the only element in the marketing mix that produces revenue;
Why are prices set?
Prices can be set to keep the loyalty and support of resellers or to avoid government intervention. Prices can be reduced temporarily to create excitement for a product or to draw more customers into retail store. One product may be priced to help the sales of other products in the company’s line.
Why are costs important?
The company wants to charge a price that both covers all its cost for producing, distributing, and selling the product and delivers a fair rate of return for its effort and risk. A company’s costs may be an important element in its pricing strategy. Many companies, such as Southwest Airlines, Wal-Mart, and Union Carbide, work to become the “low-cost producers” in their industries. Companies with lower costs can set lower price that result in greater sales and profits.
What is the only element in the marketing mix that produces revenue?
Price is the only element in the marketing mix that produces revenue; all other elements represent costs. Price is also one of the most flexible elements of the marketing mix. Unlike product features and channel commitments, price can be changed quickly. At the same time, pricing and price competition is the number one problem facing many marketing ...
What are the factors that affect pricing decisions?
Internal Factors Affecting Pricing Decisions: Internal factors affecting pricing include the company’s marketing objectives, marketing strategy, costs and organizational considerations. 1. Marketing Objectives: Before setting a price, the company must decide on its strategy for the product. If the company has selected its target market ...
What are the objectives of a company?
Common objectives include survival, current profit maximization, market share leadership, and product quality leadership. Companies set survival as their major objectives if they are troubled by too much capacity, heavy competition, or changing consumer wants.
What is current profit maximization?
Many companies use current profit maximization as their pricing goal. They estimate demand and costs will be at different prices and choose the price that will produce the maximum current profit, cash flow, or return on investment. Other companies want to obtain market share leadership.
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Definition
- In the narrowest sense, price is the amount of money charged for a product or service. More broadly, price is the sum of all the values that consumers exchange for the benefits of having or using the product or service.
Marketing
- Price is the only element in the marketing mix that produces revenue; all other elements represent costs. Price is also one of the most flexible elements of the marketing mix. Unlike product features and channel commitments, price can be changed quickly. At the same time, pricing and price competition is the number one problem facing many marketing executive. Yet, many comp…
Goals
- At the same time, the company may seek additional objectives. Common objectives include survival, current profit maximization, market share leadership, and product quality leadership. Companies set survival as their major objectives if they are troubled by too much capacity, heavy competition, or changing consumer wants. To keep a plant going, a company may set a low pric…
Purpose
- Many companies use current profit maximization as their pricing goal. They estimate demand and costs will be at different prices and choose the price that will produce the maximum current profit, cash flow, or return on investment. Other companies want to obtain market share leadership. To become the market share leader, these firms set prices as low as possible.
Example
- A company might decide that it wants to achieve product quality leadership. This normally calls for charging a high price to cover higher performance quality and high cost of R&D. Fort example, Caterpillar charges 20 percent to 30 percent more than competitors for its heavy construction equipment based on superior product and service.
Uses
- A company might also use price to attain other, more specific objectives. It can set prices low to prevent competitors from entering the market or set prices at competitors level to stabilize the market. Prices can be set to keep the loyalty and support of resellers or to avoid government intervention. Prices can be reduced temporarily to create excitement for a product or to draw m…
Cost
- 3. Costs: Costs set the floor for the price that the company can charge. The company wants to charge a price that both covers all its cost for producing, distributing, and selling the product and delivers a fair rate of return for its effort and risk. A companys costs may be an important element in its pricing strategy. Many companies, such as Southwest Airlines, Wal-Mart, and Union Carbid…
Management
- Management must decide who within the organization should set prices. Companies handle pricing in a variety of ways. In small companies, prices are often set by top management rather then by the marketing or sales departments. In large companies, price is typically handled by divisional or product line managers. In industrial markets, salespeople may be allowed to negoti…
Industry
- In industries in which pricing is a key factor (aerospace, steel, railroad, oil companies), companies often have a pricing departments to set the best prices or help others in setting them. This department reports to the marketing department or top management. Others who have an influence on pricing include sales manager, production managers, fiancé managers and account…
Types
- The sellers freedom varies with different types of markets. Economists recognize four types of markets, each presenting a different pricing challenge.
Mechanism
- In the end, the consumer will decide whether a products price is right. Pricing decisions, like other marketing mix decisions, must be buyer-oriented. When consumers buy a product, they exchange something of value (the price) to get something of value (the benefits of having or using the product). Effective, buyer-oriented pricing involves understanding how much value consumers pl…
Risks
- Another external factor affecting the companys pricing decisions is competitors cost and prices and possible competitor reactions to the companys own pricing moves. A consumer who is considering the purchase of a Canon camera will evaluate Canons price and value against the prices and values of comparable products made by Nikon, Minolta, Pentax, and others. If canon …
Influences
- When setting prices, the company also must consider other factors in its external environment. Economic conditions can have a strong impact on the firms pricing strategies. Economic factors such as boom or recession, inflation, and interest rates affect pricing decisions because they affect both the cost of producing a product and consumer perception of the products price and …
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