The Price Setting Of A Company

821 Words Aug 5th, 2015 4 Pages
A spectacular product that a company might be selling can go bad if the product pricing is not done with proper evaluation. With too high a price, the customers will run away and too low a price, the profits will not be substantial. Price setting is a complex task that requires consideration of costs to the budgeting of key demographics.
The process of setting a price can be described in following 6 steps:
• Select the price objective (Profit Sales/Status Quo)
• Determine demand
• Estimate costs
• Analyze competitor price mix
• Select pricing method
• Select final price
The first step is Examining the Objectives. It is known that marketing decisions which involves price are driven by the objectives set by the management of the organization. The objectives can be divided into two levels. Firstly, all the decision impacting any functional area (finance, marketing, operations, etc.) in the organization are driven by the organizational objectives. Driven by objectives, marketing department sets its own objectives which includes for instance ROI, ROMI, Cash Flows, and manizing profits. Pricing decisions are used to help each department meet its objectives. Also, price setting procedure looks into whether the decisions made are in sync with the decisions made for the marketing decisions such as target audience, product, logistics, and promotion. So a product from a company with a strong brand image having distinctive feature set and targeted to high-class customers is expected to…
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