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
- 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
- To get competitive advantage
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