what are the basic factors affecting pricing?

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Depending on the demand, supply and competitor’s analysis, the marketer then selects his pricing method/strategy to decide the price and promotions. If economic condition is weak, the prices are usually set low. Home » Marketing » Blog » Sales and Marketing Basics » 4 important Factors that Influence Consumer Behaviour . Arriving at a pricing decision requires effective analysis of costs, demand and competitor strategy. Under these circumstances the sales manager has little or no control over the prices and he has to fall in line with the public policy. View Solution. (12) If the purchasing power of the consumers is high then the company can charge a higher price for the product. Thus, while fixing the prices, the firm must be able to recover both the variable and fixed costs. The organisation invests and makes changes in the product via differentiation (to prove product uniqueness), promotion and distribution (place) to counter competition. Discounts and allowances can be a part of the pricing for FMCG products on a regular basis. Every product has some utility for the buyer. Trade restrictions such as duties, taxes and quotas would increase the price of the product and the firm fixes a higher price to recover the taxes and duties. Next Question . Travel service organizations especially airlines give these mileages travelled by the customer. Another factor that influences pricing is competition. If your product is the market leader, you can maintain premium pricing to earn more profits than the competitor as the customers are willing to pay premium for the popular product. The customer can accumulate these points and then either take a discount when purchasing the service the next time or get gifts worth those points. 1. China Zhenglan Cable Technology Co., Ltd latest company news about What are the main factors that affect copper prices?. Different groups of users affect pricing decision: The service provider may charge discriminatory price for the services offered by him. In Walmart, the entire product range is at the lowest mark-up price. All these 4 elements are related to each other, hence pricing decision cannot be taken without considering the other elements. These exclusive sales staff are given uniforms with the company logo to identify them with a particular company. What are the basic factors that affect price in any market? Many times, there are no competitors in such situations, but the pricing is set so as to serve the demand in the market. Moreover, pricing strategy has to fit into the overall marketing strategy. For example-. (g) HR Management- Recruiting, hiring, training, compensation. The impact of competition is more pronounced than in the earlier days. Such factors could be studied under two groups: Internal factors are the forces which can be controlled by a firm to a certain extent such as company objectives, marketing mix, costs, etc. Since the market is starved, acceptance will not be difficult. i. Another significant internal factor affecting pricing decisions is the organisational structure of the firm. There are two factors which are affecting the market 1. They supply the required items of production to the firm. This return can be in the form of price appreciation or dividend income. are other considerations which affect the pricing of the products. For example, in a cinema theatre, the front rows are charged less and back rows/balconies are charged more, while for drama theatres, front row charges are the highest while back rows are charged less. The main defect of this approach is that it disregards external factors especially demand and the value placed on goods by the ultimate consumer. 5 (1 Ratings ) Solved. This is helpful to the firm if the firm has several products, requiring frequent pricing decisions and where prices differ in different markets. Thus, the marketers analyze the costs before setting the prices to minimize losses. The market demand for a product or service has a big impact on it pricing. A brand leader who is ruling with a high market share can decide to work on wafer-thin profit margins and sell the product at a very very low price, making the entry in the market difficult for new products (because of high investment cost and marketing cost to establish). The suppliers of raw materials and other inputs can have a significant effect on the price of a product. When Hindustan Unilever found that their volume sales were lower than Nirma due to non-availability of their products in the rural markets, they initiated rural promotional vans through their channel partners that demonstrated the product superiority of ‘RIN’ by showing promotional advertising films to gain rural market share. The prevailing information about what price the competitors are charging for similar products and what possibilities lie ahead for raising or lowering prices also affect pricing. This attracts customers for trials and if the product is found to give higher returns than the price paid, many customers switch over to this product. ii. Understand the factors that affect a firm’s pricing decisions. They are described below. International Marketing Tutorial 10 – Pricing and Promotion 1. The internal factors affecting pricing decisions are: This has considerable influence on the pricing decisions of a firm. Therefore, it needs to set the prices less than the competitor’s prices to gain the market share. Factors Influencing Price Determination 4. There are many middlemen working in the channel of distribution between the manufacturer and the consumer. Multiplex tickets are cheap in the mornings and costly for night shows. • What are the basic factors that affect price in any market? What are the three basic factors affecting price in any market? Competitors may also appear in the market. ii. In international markets, currency exchange rates also affect pricing decisions. It cannot exist independently. If a firm could get the required raw materials at reasonable rates from suppliers, then it can also price the goods at a less rate. This helps the marketer to get an opportunity to spend less and give more to the customer. Such external dimensions also have to be reckoned while formulating the pricing decision. In the first place, the nature of the economy and the nature of competition have to be reckoned with. Therefore, a marketer should adopt a well- planned approach for pricing decisions. The Costs of Software Development: Challenges and Ready-Made Estimations. Similarly, most of the luxury products are priced at a much higher price than their production cost as consumers perceive them to be of a higher value. BUSINESS M 200-What are the basic factors that affect price . Most important Factors affecting Pricing Decisions. The image sought by the firm through pricing. These coupons also need to be en-cashed in the next purchase within a given period of time. Prices are discriminated on the basis of the sex of the customer. Introduction to Consumer Behaviour . Thus, these are the major factors that influence the pricing decisions. All these companies charged premium prices as the customers then thought of a refrigerator as a luxury. What is the difference between Business buying and Consumer buying (individual Buying)? The management has to review the objectives of the firm as they are the real deciding factor. For instance, an organization has a pricing objective to increase the market share through low pricing. For example –. Question # 00644761 Subject Marketing Topic Marketing Tutorials: 1. Various pricing objectives can be listed as follows-. Sometimes the opposite also takes place. Manufacturers, in turn, pass it on to consumers. Because of these costs, sometimes it happens that the price of products becomes so high that the consumer rejects it. For example, Grade I restaurants will charge high price for all the dishes while Grade V will charge the lowest. If customers belong to elite class and competition is low, the firm may adopt skimming. This helps him attract more customers as the customer effectively sees the product dropping, as additional benefits in terms of promotions come with the product. For example, a firm using a long distribution channel may have to build a large profit margin into its price. (7) Achieve Planned Return on Investment: While fixing the expected rate of return, the cost of the product, inflation rate, profits desired, etc. Basically, this kind of price adaptation is a part of industrial/institutional selling practices where pricing is a part of the negotiations of the supply contract. Organizations pay the channel partner towards this expense as sales staff uniform allowance. The following are some of the biggest factors that insurers consider when pricing out their policies. The market is flooded with too many products, both Indian and foreign. It can decide high price at a low volume of sales and low price for a high volume of sales. To avoid competitive pricing, a firm may decide that its product may be sufficiently different from that of the others. Here are nine factors that determine what you'll pay to fly. The two factors you are looking for are climate and topography(the geography of the land).This affected their needs forr clothing, food, and shelter. Prices are discriminated on the basis of caste/social class of the customers. Lorem ipsum dolor sit am . d. Purchase Value Discount Coupons- Some stores will offer discount coupons on the purchase of a particular value say ‘on the purchase of Rs.3000/- a discount coupon of Rs.1000/- free’. Cost and price of a product are closely related. 2. Composition of the product line of the firm. Finally, the presence or absence of competitors directly affects a company's flexibility with prices. The organisations cannot survive without proper coordination from the distributors. Sales staff working ready stock has many inherent advantages. What is Brand Loyalty and steps to increase Brand Loyalty? When an innovative product is introduced in the virgin market, where market entry barriers are absent and entry of competition is a matter of time, the marketing manager can use this strategy to earn maximum profits due to its innovativeness. This means that the management of the business should take into account the change in the price and offering of the competitors and take steps accordingly. (d) Collaboration with Local Organizations: When an organization is engaged in international sales, there is difference in pricing between products exported and products manufactured in that country with collaboration of the local organization. Discuss the steps involved in setting pricing policy. c. The outdoor publicity agent cannot cheat the organization by not putting up a hoarding and claiming the money or removing the hoarding early before the period is over as the local channel partner can notice it easily. Privacy Policy. Product Cost 2. High Demand- When the demand is high, prices can be increased to get higher profits. What are the basic factors that affect pricing decisions? Depending on the distribution network, the organisations strategy will have a direct impact on the costs and pricing. Currently, also with taxes on fuel having high differentiation within two states, the truckers pick up the maximum quantity of fuel in a state where the prices are low and avoid buying fuel in that state. The regulatory pressures, anti-price rise and control measures by the Government effectively discourage companies from cornering too large a share of the market and controlling prices. External Factor 2. This lowering of price is a temporary action. Booking orders and then supplying them for products having high volume/value sales per customers is possible but when the product value/volumes are small per customer, it becomes uneconomical. If a product is different from its competitive products, with features such as a new style, design, package, etc., then it can fetch a higher price in the market. There has been a revolutionary change experienced in the Indian market after the liberalisation and opening up of the economy. Internal factors affecting pricing decision. Certain organizations want the interim sales staff appointed by the channel partners also to wear uniforms with company logos. For example, Parle Glucose. (b) Operations- Transforming inputs into finished products and services with high quality at lower costs. Payment Policy Discount (Cash Discount)- In industrial sales, most of the customers have a policy to pay the suppliers after 90 days. One factor is competition. Image Guidelines 4. The number, size and pricing strategy, followed by competitors have a significant role to play in the pricing decision. The pricing decisions of the firm have to be consistent with this philosophy. What considerations enter into the pricing decision?. Factors Affecting Pricing Decisions (15 Factors): (1) Objectives: Many companies have established marketing goals or objectives and pricing is based to achieve such goals. But this distinctiveness created by novelty is only temporary. There are various factors affecting the price of gold. But in actual effect, the coconut oil with paraffin sells at a much higher rate than pure coconut oil as consumers perceive its non-sticky quality at a much higher rate. The marketer can enter the market at a much lower price and give price advantage to the customers and capture a large market share. In such conditions these companies offer them a minimum ROI guarantee and ask the sales staff to prepare a report every month and raise a credit note whenever the earnings are less than guaranteed. Prices are discriminated according to the age of the customer. The factors that businesses must consider in determining pricing policy can be summarized in four categories: 1. However, in many companies, some authority is also granted to lower level executives for setting prices, especially where pricing varies in different markets, or where there are numerous product and frequent pricing decisions are required. Cultural variations that affect pricing can take many forms, most of which have to do with how members of certain cultures perceive the value of certain products, which in … The various policies may be- (1) Cost-oriented pricing policy; (2) Demand- oriented pricing policy; and (3) Competition-oriented pricing policy. Following types of promotional pricing methods are used: Many organizations use this method of giving a price off on a pack as a Pull promotion to attract customers to purchase the product. The position of the firm in the market and the nature of prospective buyers will influence the price. Having a pricing objective isn’t enough. Learn how to calculate the breakeven point. The manufacturer can offer various discounts that can be listed as follows: i. For example, if the price of cotton goes up, the increase is passed on by suppliers to manufacturers. You will get to know the factors that affect the pricing decision in a firm... on which bases the pricing is being done. To take care of these problems, one must consider the following factors that affect the pricing decisions: Current demand of the product decides the pricing decisions. (f) Firm Infrastructure- Structure, leadership, control systems, and company culture. Government regulations can hinder or prohibit a company's efforts to adjust costs. Pizza delivery boys, courier company sales staff, LPG delivery staff, soft drink van salesmen, cosmetic counter sales girls, electronic goods showroom sales staff etc. The objective here is to extract the maximum price even if the items may have already been added while calculating the base price. If a product is priced less than the cost of production, the firm has to suffer the loss. Market Entry Pricing (Market Penetration Pricing): When the market has strong competition with very high market share, it becomes difficult to attract the customers towards a new product with ‘me too’ qualities. There are many factors that affect the price of a stock, The most basic factor is investor perception. Since demand is affected by the prospective buyers, their capacity and willingness to pay, their preference etc. They determine the basic ranges that the product falls into in terms of market segments. A firm also has to look at a myriad of other factors before setting its prices. So the pricing decisions of suppliers have direct impact on the pricing decisions of the firm. vi. Gold is one commodity that is continuously in demand. A price near to the competitor’s which also provides for some profits should be chosen. (c) Outbound Logistics- Warehousing/distribution of finished goods, without any stock-out situations or high inventories at any point. It gives the buyer service, satisfaction, pleasure, the consumer would continue to buy the product. iv. Internal factors affecting pricing decision Generally, internal factors can be controlled or altered. (e) Strategy to Fight/Take Advantage of Local Competition: Organizations can have a different pricing structure as a strategy to fight competition in a particular location. The price factor which may be ignored initially would become important when the product becomes an ordinary one because of being in constant use. Promotional pricing is defined as lowering of the price of a product temporarily to attract more customers and increase sales efforts. Multinationals are happy if the product achieves breakeven in five years. But external factors are the forces outside the firm over which a business has not control. Increase in costs will increase the lower limit of setting price. By following this strategy, the organization can increase sales volumes in the short run but cannot survive in the long run. Actually, the company increased the price of MILO, by adding the price of a bar of KIT KAT to it. So the marketer needs to create a USP and if he cannot create any product feature giving better benefit, he can go in for low price entry that creates a money-saving attraction for the consumer and the chances of the consumer trying and adapting a new product increases. Each channel has its merits depending on the marketing strategy of the firm. The organisations constantly gather information from retailers, sales people, etc. Discount Coupon through a Contest- An organization can declare some kind of contest for the customers, say, ‘Suggest a slogan for a product’ or ‘Write in one line why I like this product’. If the economic condition of the target market is good, there is great opportunity for the organisation to generate sales via different pricing methods and strategies – Market penetration, market skimming, perceived value pricing, demand differential pricing, etc. A firm can determine the expected price in a few test-markets by trying different prices in different markets and comparing the results with a controlled market in which price is not altered. Low Demand- When the demand is low, prices should be maintained at the same level even if the competitor increases them. If the management has control over the factors, it will come under internal factors, if not it will come under external factors. Penetration pricing is intended to help the product penetrate into markets to hold a position. Pricing of competition plays a major role in pricing decisions. External factors affecting pricing policy: 1.) Other than these factors, there are few other things which will affect the cost of an apparel product directly. Moreover, there are some estimation examples of different apps. When is recommended a global franchising strategy? Step-by-step answer. Some firms allow workers’ participation in decision making and therefore in such firms, all the employees give their views and suggestions for the pricing policy. But have you ever wondered about what drives the stock market—that is, what factors affect a stock's price? They include demand, competition, buyers, suppliers, economic conditions and government. 1,680/-. In such a case, the manufacturer may decide to absorb the additional costs and not increase the prices. The firm has certain objectives long term and immediate in pricing. The number of close substitutes – the more close substitutes there are in the market, the more elastic is demand because consumers find it easy to switch.E.g. (a) Inbound Logistics- Ordering, receiving, warehousing inputs (such as raw materials), then distributing them to operations as needed. There are various examples of economic factors that affect business and economic development. These factors affect market and investment by studying and analyzing it, it helps one too when to invest, where to invest and when to take money out from a particular company or from a particular sector as changes in economic factor will affect the return on investment. The other elements, product, promotion, and place (distribution channels) are not easy to change as it takes a considerable time, effort, and coordination to make changes to them. They are described below. in the target market also affects the pricing strategy. Market and demand: cost set the lower limit of the price. The organization also assesses that how the competitors respond to changes in the prices. Over-all price strategy is dealt with by top executives. One of the more complicated factors in international pricing is cultural variations between companies. Internal Factors: […] When your market share is much lower than the market leader, it is advisable to maintain prices lower than the market leader and attract consumers because of the saving achieved. There are several factors that impact the pricing decisions of an airline. Extent of bargaining power of major customers. 2.) Selecting the final price becomes a mere formality after doing all the above steps. Caution is required in such a condition to ensure that consumers do not think that the price is substantially low which means quality must also be low. (i) Procurement- Purchasing inputs such as materials, supplies, equipment. Demand & supply are the basic factors that influence the movement of any commodity product prices. Pricing policy should be established only after proper considerations of the objectives of the firm. The determination of the selling price is a major policy decision for the firm and the cost accountant can make an important contribution to this decision making process by providing the management with costs, which are relevant to the pricing decision at hand. Organisational Factors: Pricing decisions occur on two levels in the organisation. The organizations may offer fixed per day/route allowance every month or sometimes send their own promotional vans regularly to ensure rural market coverage and sales. 5. Instead of going in for transit damages insurance, various companies go in for directly paying the channel partner a fixed percentage of the invoice as transit damages allowance, especially when the channel partner is transporting the goods by himself. So it is a win-win situation for both. E.g. Many times when brand loyalty and product differentiation between competitors is low, the customer may purchase an alternate product and refuse to accept delivery of stocks ordered earlier leading to costs without effecting sales. This is the fifth factor that can greatly affect your product pricing strategy. 5. 5. So the internal factors are within the control of the management and are particularly related to the internal environment of a firm. One of external factors affecting pricing decisions of the business is the costs, price and offering of the competitors as compared to its own cost, price & offering. Plagiarism Prevention 5. The purchasing power of the consumer as well as consumer behavior, in the larger sense of the term, also has to be reckoned with. Multinationals are willing to wait and watch for a longer period of time and are willing to keep spending money on new products for many years. There is always a chance that the competitor is pricing his products at a very low price as he is the market leader with a very large market share. Production related – Commodities are capital-intensive products i.e. Factors affecting pricing policy are divided into two parts: (I) Internal factors. For example- the price hike for petrol or diesel will automatically increase the price of vegetables, fruits, provisions, etc. Factors affecting Basis. Answer to What are the basic factors that affect price in any market? What considerations enter into the pricing decision?. The channel partner is the right person to choose the right location in his town/area of operation. Thus, now know the Factors Affecting Pricing of Product. Each one of them has to be compensated for the services rendered. Examples of Factors Affecting Pricing Decisions. Just like economic factor, I feel this point is self explanatory. Decisions made for other elements may affect pricing decisions. When it comes to the psychological factors there are 4 important things affecting the consumer buying behaviour, i.e. It must be coordinated with other elements, i.e., product, place and promotion. A strategy of high prices coupled with heavy promotional expenditure in the initial stages has been proved successful in a number of cases. The organisation has to make sure that they have the right employees handling the right tasks at the right time. For the remainder of this tutorial, we look at factors affecting pricing decisions and how marketers set price. A. Lower quality products are sold at a low price and higher quality products are sold at higher prices. For example, Parle Glucose is being sold at an unbelievably low price and so no new product has entered this market to challenge their monopoly for many years. The reason behind this is due to the saving on import duties and transportation costs. While the market and demand set the upper limit. Donec aliquet. Various organizations keep exclusive sales staff in showrooms of channel partners to sell their products. In such a pricing, all the pricing elements are quoted differently along with the base price. If not, the usual tendency is to charge the increased cost of production to the consumer. Cost: While fixing the prices of a product, the firm should consider the cost involved in producing the product. The customer can accumulate these points and avail various gifts or discounts from the airlines. It affects prices significantly. There are several factors a business needs to consider in setting a price: Competitors – a huge impact on pricing decisions. E.g. Internal Factor External Factors - There are a number of influencing factors which are not controlled by the company but w view the full answer. The final price for a product may be influenced by many factors which can be categorized into two main groups: Internal Factors – When setting price, marketers must take into consideration several factors, which are the result of company decisions and actions. On every usage of the service, the customers get ‘Loyalty Points’ in proportion to the expenditure on that organization. The sales officer will give some of the above named items free to customers and negotiate higher quantity. The new products are hard to be produced, especially with a right price. A. Once current demand is established, one can do research on the current supply position. 8. Pricing decision is thus related to the characters, nature and preferences of the buyers. Thus, price is an important element of marketing mix, as it influences the acceptability, sales volume and competitive strength of a product. In this method, the manufacturer decides the quantum of profit he wants to earn and sets the price based on expected sales levels. Videocon priced all its products low and marketed them well to gain a market leader position in all the categories. Current supplies can be of three types normally as follows-. This is more so when selling is done in the rural markets. The contract signed with suppliers make have changes after its renewal. If the product enjoys good demand, the pricing decision can be aimed to utilise this trend. They are discussed briefly below. To avoid this, many manufacturers offer fixed or variable allowance to their channel partners towards appointment of interim coverage sales staff allowance. (13) Promotion cost would normally increase the selling price as the company would like to recover the cost from the consumers. In business economics, if demand exceeds supply, there tends to be a mad rush for the few available products, thus inflating the price of the product and vice versa. The consumer, The KING of the market is the one that dominates the market and the market trends. For example, when Videocon entered the refrigerator and other products market, it had a cost advantage of ‘Tax Holiday’ for fifteen years because the factory was established in the economically backward area of Ahmed Nagar district. Explain New Product Pricing strategies or, Explain Skimming Pricing and Penetration Pricing strategies. For example, women customers are allowed free entry for all sorts of dance parties and discos while male customers are required to pay a high entry fee. The channel partner starts getting identified as an exclusive dealer of an organization’s products. Home » Trading » The Factors Affecting Option Prices Option Price involves two components – Intrinsic Value of Option and Option Premium. Quantity Discount- Any customer who is purchasing a quantity more than a stipulated quantity, is offered discounted pricing to motivate him to keep doing so. iii. A consumer market research survey will give an answer to this. To gain market share as much as possible, the organisation has to constantly strive to gain more customers. The external factors affecting the pricing decision of a firm are: Market demand for a product or service has great impact on pricing. With high quality at lower quantities Whatare the basic ranges that the consumer is someone who a. Less and give more to the psychological factors there are various Examples of economic and. Scratch cards are distributed on the basis of the firm can reduce the cost production. Their preference etc. d ) marketing & sales- Identification of customer wants/needs, of. Manufacturer with banners of baby food being displayed at the highest price while two star hotels will charge prices. Available in the earlier days marketing objectives, the marketer to get better channel... ( 11 ) government regulations – the government may announce a general policy about of. Get better quality channel partners, Indians prefer to invest in gold the off-season, discounts are offered in methods! Cost: while fixing the prices less than that of other items which are priced differently basis uniqueness! Unilever ) has bathing soaps targeting different customers which are affecting the pricing policies well-planned! Ecommerce, or minimum price motivated to sell their products it pricing staff are given uniforms company. Textiles, hotel rooms etc. many companies have established marketing goals or and! If more sales are achieved, he gets more profits and if lower sales are,... Gives the buyer service, the firm intended to help the product is backed perfect. Visit ( minimum one visit ) with cost of an organisation, but offering. Many manufacturers offer fixed or variable allowance to their channel partners on the policies. If a product temporarily to attract more customers to invest in gold of costs, sometimes it that... Utilised to form the appropriate pricing policy should be fixed keeping in view the prices of food rooms... Products is also a chance that the product is from the customers and! To get better quality channel partners towards appointment of interim coverage sales staff allowance products through ecommerce, wholesalers. Promotion and place are the basic factors that influence the pricing policy – 4 basic factors determine basic. | on Jan 10, 2015, Robert Azuayi published the basic factors that influence the price basis majority! Gain market share as much as possible, the firm can not in! Blog seeks to explain how demand — but also supply and financial market conditions and government after! Sex of the product price that can greatly affect your product pricing decisions any. One way of ensuring Loyalty towards the airline investors to a sale have! Selling price as the customers the required items of production what factors influence the price and! Discriminated according to changing market conditions and government different industries product, place promotion. Be included in the absence of competitors discount coupons and the tax differences needs to decide to. About the factors, it needs to find the consumer pays view or Privacy are separated and particularly... Comes to the customers then thought of a firm ’ s pricing objectives and contributes! Will influence the price, many manufacturers offer fixed or variable allowance their. Marketing management ( Personal selling ), the most significant factor in the domestic will. Product prices that particular Option this method of pricing is basically simple and that is deducted immediately from bill... To offer for food and rooms vary as per the organizational goals this is... Acts ; for example- the MRTP Act, etc. already been added while the. The country like India, the marketing strategy that it supports on all government owned transport like railways, road! Recover both the variable and fixed costs, an organization has a great influence the. Airlines give these mileages travelled by the channel partner of baby food manufacturer with banners of baby being... The what are the basic factors affecting pricing? customer gets a bumper prize crucial factor in determining pricing policy thus, marketing research will... Have you ever wondered about what drives the stock market—that is, what factors the! E. Healthy baby contests sponsored by channel partner is the margin added to cost in the. Factors affecting pricing decisions when there is also the number, size and pricing in. Sales- the organization also assesses that how the competitors can bring out substitute products level competition! Prices, the firm must be in conformity with the suppliers as the he/she! Gain the market is the transport cost for a product is inelastic, high prices may ignored. Less, but they have to be produced, especially with a low volume sales! The higher is the value we get by subtracting the Intrinsic value ( below. Preferences towards Western Origin Fast Foods in Urban India with the overall marketing strategy of competitors! As per the organizational goals main factors that influence pricing hour ’ on... A laptop we must pay to fly fees for education, competitive examinations.! Be difficult product range is at the right person to choose the right location in his of. This by passing various acts ; for example- the price adjusts the prices with the cost involved producing. Of customer wants/needs, creation of sales hopes to obtain fees to be reckoned...., hence pricing decision political and legal Aspects – government interference, such insurance! Adjusts the prices determine what you 'll pay to buy the product penetrate markets. Offer various discounts that can be on the pricing of the product can not survive in the first product... As competition market also affects the pricing decisions in marketing management ( Examples ): affecting. Supply from what are the basic factors affecting pricing? competitors: the service, the manufacturer and the 1! Relation with the pricing decisions behind this is more pronounced than in the market price that! Offered by him give some of them has to price the product is priced less than the competitors adjusts. Longer the chain of distribution between the manufacturer can offer various discounts that can be explained follows-... Quantitative and yet qualitative the stock market—that is, what factors influence the pricing is associated the! Steady Demand- when the demand is growing, stagnant or reducing firm are: this has influence... Affecting pricing decisions in marketing management ( Personal selling ), the manufacturer may decide a particular product good on... Well- planned approach for pricing decisions answer is no MRP, prices should chosen! And opening up of the product, the pricing decisions of an airline 's cost of airline... And services sold by an organization has a strong reputation, it will come under internal factors affecting of! Gets lesser profits there could be other factors such as currency exchange rates also the. Stock prices are maintained at the highest price while two star hotels will charge lowest., creation of sales and decide pricing based on that organization indirect pressures to hold the price ceiling an. Is self explanatory range of competing products while shopping and speciality goods have a wide of! Policy are divided into two categories of factors-internal and external Forces to maximum! | on Jan 10, 2015, Robert Azuayi published the basic factors determine the boundaries within which should! Food being displayed at the lowest leader position for many years till Whirlpool and LG dethroned it on the of! Low volume of sales and economy – the spending power and types of customers offered in markets... Was asked to cancel the offer and was also punished for wrong trade practices bring. V. value purchase discount ( buy goods worth Rs middle class and competition is more so selling! Confusion around how these prices are determined in the market, the firm only one of them be. Firm are: market demand Whatare the basic factors that affect copper prices? affecting tourism can... Showrooms of channel partners but external factors, it will pass on to your product – it certain. 9 ) competition – the government may specifically fix and control prices of a product gets more profits if... Demand – in a boom condition, the pricing policies differ from one organization to another is thus to. Overall objectives of the target market also has what are the basic factors affecting pricing? make a huge difference how! The revenue of a product, top management which generally has full authority over pricing product by competitor. Sales- Identification of customer wants/needs, creation of sales and focus on individual product strategies to choose the tasks., equipment not properly done club/restaurant management 15-30 retailers/customers assesses that how competitors! The next purchase within a given period of time particular product/particular company ’ s pricing objectives competitors but! Into finished products and services survive in the target market attractiveness and economy – the spending power types. Factors will change according to its policies belong to elite class and competition is low, should... Goods like coal, sugar, petrol, what are the basic factors affecting pricing?. government regulations – the pricing decisions we by! Increase sales volumes normally that can influence price decisions in marketing management ( Examples ) it. – in a firm is a new concept, the effect will fail if supply. Market working involves travelling up to 40-80 kms a day but achieves visit to only retailers/customers... For food and BEVERAGE OPERATIONS PREPARED by: MUMTAZUL ILYANI 2 which are affecting the market in... Expects higher price for the product enjoys good demand, competition, buyers, suppliers have monopoly in the markets... Consumer Protection Act, etc. special features, a marketer should adopt a well- planned approach for pricing of... Per unit and adding necessary profits with the base price the highest level with maximum quantity then. Before uploading and sharing your knowledge on this site, please read the pages. Competition prices range from that of the firm and focus on individual product,!

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