--%>

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 : Illustrates terms total cost

    Illustrates the terms total cost, average cost and also marginal cost?

  • Q : Consuming extra units of goods The

    The observations that whenever output is expanded, the costs ultimately grow faster than output, and that the enjoyment people receive from consuming additional units of a specific good ultimately declines, both pursue logically from the law of: (1) Unexpected effects

  • Q : Marginal revenue product and marginal

    When the marginal revenue product of the last worker hired through a large firm is fewer than its marginal resource cost, in that case the firm: (i) increases profits if this lies off a few workers. (ii) operates in a region of decrea

  • 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 : Wage Rates and Marginal Resource Costs

    When all markets wherein a firm operates are purely competitive, in equilibrium the marginal resource cost of labor is the same to the: (w) firm’s marginal revenue. (x) marginal cost of output. (y) wage rate the firm must pay to hire more worker

  • Q : Illustrates the relatively elastic

    Illustrates the relatively elastic demand?

  • Q : Explain elements of managerial

    Illustrates the elements of managerial economics as a tool for decision making?

  • Q : Lower Wage Differentials in Occupation

    If all else regarding two occupations are relatively equal, then wages tend to be lower for jobs which: (1) require important education and training. (2) expose the worker to bad weather. (3) require extended periods away from home. (4) pose health and safety hazards

  • Q : Explain the decision making areas of

    Explain the decision making areas of the decision making.

  • Q : Minimum supply to specified amounts of

    If the owner of a resource is paid in excess of the minimum needed to supply specified amounts of the resource, in that case the owner is the beneficiary of: (1) economic rents. (2) wage premiums. (3) excess profits. (4) surplus values. (5) capitaliza