--%>

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 : When is our society possibly operating

    Our society is possibly operating inefficiently when: (w) we could grow more pecans by producing fewer walnuts. (x) asthmatics would gain when all pollution were removed. (y) whole medical costs would be lower and people would be healthier when we dev

  • Q : Average Benefits in Human Capital and

    Throughout the past 50 years in the United States, there the average gains in lifetime income related along with having a college degree in addition to a high school diploma have: (1) declined since the larger proportion of the population that is college educated has

  • Q : Profit Maximization in Labor Market and

    As a firm is a pure competitor in both the labor market and during the sale of its product, this will hire labor where: (w) profit is maximized. (x) marginal revenue product = marginal resource cost. (y) wage = value of the marginal product. (z) All o

  • Q : Significant causes giving birth to

    What are the significant causes of business cycle to give birth?

  • Q : Diminishing Marginal Productivity of

    Workers tend to be less productive at the margin like they work along with increasingly huge amounts of: (w) physical capital. (x) personal human capital. (y) technology which makes them narrow specialists. (z) labor from other people on an assembly line.

  • Q : Supply of labor by increase in wages

    If the wage rate increases from $25 per hour to $40 per hour, in that case the elasticity of the supply of labor from this worker is roughly: (i) zero. (ii) 7/15. (iii) 13/15. (iv) one. (v) minus 13/15.

    Q : Illustrates the fixed and variable

    Illustrates the fixed and variable inputs in economics?

  • Q : Wage Rates and Marginal Resource Costs

    When a firm is a price taker into the labor market and the wage is $80 daily, the marginal resource cost incurred while hiring 20 more workers daily is: (w) $80. (x) $1600. (y) $800. (z) $400.

    Q : Describe the term trend projection

    Describe the term trend projection.

  • Q : Illustrates the significance of

    Illustrates the significance of elasticity?