Determine the Internal factors of pricing decision
1) Organization factor: pricing decision occur on two level in the organization. Overall price strategy is dealt with by top executives. They determine the basic ranges that the product falls into in terms of market segments. The actual mechanics of pricing are dealt with at lower levels in the firm and focus on individual product strategies.
2) Marketing mix: marketing experts view prices as only one of the many important elements of the marketing mix. A shift in the any one of the elements has an immediate effect on the other three-production, promotion and distribution.
3) Product differentiation: the price of the product also depends upon the characteristics of the product. In order to attract the customers dissimilar characteristics are added to the product like quality size color to the considering current demand and competition in the market. The product ultimately goes to the public and their capacity to pay will fix the cost; otherwise product would be flopped in the market. Generally customers pay more prices for the product which is of the new style fashion better package, etc.
4) Cost of the product: cost and price of the product are closely related. The most important factor is the cist of production. In deciding to market a product a firm may try to decide what price are realistic considering current demand and competition in the market. The product ultimately goes to the public and their capacity to pay will fix the cost; otherwise product would be flopped in the market.
5) Objectives of the firm: a firm may have various objectives and pricing contributes its share in achieving such goals. Firms might be pursue a variety of value-oriented objectives, such as maximizing sales revenue maximizing market share maximizing customer volume maintaining an image maintaining stable price etc. pricing policy should be established only after proper consideration of the objectives of the firm.