Explain the objectives of pricing policy and its aim
Explain the objectives of pricing policy and its aim.
Expert
Pricing decisions are generally considered a part of the general strategy for getting a broadly defined purpose. Before finding out the price itself, the management must decide the objectives.
When setting the price, the firm may intend at one or more of the given objectives.
1. Profit maximization: as the primary motive of business is to earn maximum profit, pricing all the time aim at maximization of profit by maximization of sales.
2. Market share: For increasing market share a firm may lower its price within relation to the product of competitors.
3. Target return in investment: The firm must fix the price for the product in a way that this will satisfy expected returns for the investment.
4. Prevent or Meet competition: with the aim of discourage competition a firm may adopt a low price policy.
5. Price stabilization: The other objective of pricing is to stabilize the product prices over a given period of time.
6. Resource mobilization: In this company may fix their prices in a way that adequate resources are made accessible for the firm’s developmental, expansion investment and so forth.
7. Speed up cash collection: Several firms try to set a price that will enable rapid cash recovery as they may be financially tight or may regard future is more uncertain to justify patient cash recovery.
8. Growth and Survival: A significant objective of pricing is survival and getting the expected rate of growth. Profit is less significant than survival.
9. Prestige and goodwill: Pricing also intends at maintaining the prestige and improving the goodwill of the firm.
10. Getting product: quality leadership, Several Companies intend at establishing product quality leader by premium price.
Illustrates the steps in formulating pricing policies in details?
An investment in specific human capital arises while: (w) Chandra learns Japanese to be eligible for a potential job in Tokyo. (x) Chele has a face lift so she can increase her fees for high-fashion modeling. (y) Chelsea practices playing a harp and a
By a purely financial perspective, you must stop going to school while you: (w) graduate from college. (x) have to take out educational loans at interest rates which exceed the inflation rate. (y) face opportunity costs of education exceeding the expe
Explain the decision making areas of the decision making.
Illustrates the case of customary pricing with details?
If a perfectly competitive firm determines that its market price is below its minimum average variable cost, this will sell: w) the output where marginal revenue equivalents marginal cost. x) any positive output the entrepreneur decid
Define the consumer psychology and pricing and affecting elements.
When a firm is experiencing diminishing returns as: (w) the marginal product of labor rises as more labor is hired. (x) the marginal revenue product of labor falls as more is hired. (y) the marginal resource cost of labor will be declining. (z) this w
Why is wealth definition of economics criticized?
What are the difference between average cost and total fixed cost?
18,76,764
1946918 Asked
3,689
Active Tutors
1435928
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!