--%>
Assignment Help - homework help

Explain the objectives of pricing policy and its aim

Explain the objectives of pricing policy and its aim.

E

Expert

Verified

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.

   Related Questions in Managerial Economics

  • Q : Regression-Correlation statistical

    Illustrates the Regression and Correlation statistical method of Demand Forecasting?

    		•
  • Q : Explain managerial economics as a tool

    Does managerial economics as a tool for decision making? Explain this term.

    		•
  • Q : States the Scarcity Definition in

    States the Scarcity Definition in economics?

    		•
  • Q : Determine shape of total revenue curve

    Within a graph along with output on the horizontal axis and whole revenue on the vertical axis, determine the shape of the total revenue curve for a perfectly competitive seller: w) U-shaped. x) inverted U-shaped. y) a horizontal line

    		•
  • Q : Very high fixed costs in contestable

    A market is improbable to be contestable when entry needs new firms to incur very high: (w) variable costs. (x) fixed costs. (y) principal-agent problems. (z) marginal costs. I need a good answer on the topic of Economics <

    		•
  • Q : States the term fixed cost in briefly

    States the term fixed cost in briefly.

    		•
  • Q : Demands of consumers adjusting to new

    CD sales have fallen from 2000, although sales of DVDs have increased, suggesting such that: (w) supply of prerecorded music should have fallen. (x) law of demand does not apply to the music market. (y) demands of many consumers adjusted to new technology. (z) music i

    		•
  • Q : Pay the lowest wages in market

    Occupations along with the highest percentage of women workers tend to: (1) pay the highest wages. (2) need relatively more human capital and experience. (3) pay the lowest wages. (4) require very small human capital or experience.

  • Q : Characteristics of a good policy what

    what is that policy that talks about not changing the policy frequently?

    		•
  • Q : Value of the marginal product of labor

    Profit-maximizing firms which operate in competitive resource and output markets adjust labor inputs till the wage rate equals the: (1) average revenue from output. (2) output price equals average variable cost. (3) marginal utility o

    		•