What Are Three Crucial Objectives Of Price Policy

C. Any gain or loss in the firm's revenue from increasing its price would depend on the price elasticity of demand: The more elastic the demand, the higher the revenue potential from a price increase.

The pricing strategy that I chose is marketing objectives. Our company will deliver on this strategy to this stand by competing with our competitor’s stand. Our competitor, Jimmy, manages the Lemonade Stand “Liquid Yellow” charges $1.50 for one cup of lemonade. However, they use artificial ingredients, such as artificial flavoring and coloring, white sugar, etc. My company decided that we want to have a price that is higher than Jim’s price. We decided that we want to charge $2.00 for a cup of lemonade. We decided to charge this price because unlike Jim’s stand, we use all natural ingredients, which cost more than artificial ingredients and are healthier for you than artificial ingredients are. That is my company’s pricing strategy.


 In general, an increase in price increases the break even point if all costs are held constant.

Companies can choose many ways to set prices, skimming price strategy where a company sets a higher price than normal and a penetrating price where low initial price is set. “Pricing

Competition within the industry as well as market supply and demand conditions set the price of products sold.

However, there are several factors for the company to choose its pricing strategy. In this case, it may be better if the company choose to sell its product at $21.50 instead of $15.50. This is due to the fact that price-cutting appears to be not a good strategy in this industry. If every player in the same industry starts to lower the price of their products, every company will end up having the low price, which in turns lead to a low profit margin. Moreover, referring to the calculation in a below table, it also implies that if the price is lower than $12, sales will not be able to cover the variable cost incurred, thus it will bring about a loss in net profit.

Relative costs like manufacturing price, price of raw2 materials and rate iof exchange also have a huge impact on the profitability of a firm. If the cost of producing the good is high then the profits will eventually be low.

Describe and give examples of some of the following types of pricing objectives: profit, market share, competitive effect, customer satisfaction, and image enhancements.

Pricing product effectively can drive success or failure for a product. But what should be considered

Price, which is one of the most important elements of the marketing mix, can be difficult to get right. Pricing too high, or low, can negatively impact on customer satisfaction and revenue. Adopting a pricing strategy is necessary to achieve desired sales objectives (Chan & Wong 2005).

Organizations today have to stay vigilant and scan all environmental aspects of the economy, their finances and the business to ensure sustainability in meeting its strategic goals. These goals cumulate from leadership abilities to develop and implement sound decisions that align with strategies that promote operational efficient and effectiveness of its product or services. Therefore, developing pricing strategies sensitive to market will further provide competitive advantages within the industry, while assisting in creating maximum profitability.

Moreover, in practice products tend to go through three phases: growth, maturity and decline. At each phase, a different pricing strategy can be used to determine price. In the growth phase of a product, new firms’ are likely to use a price penetration strategy (Redmond, 1989). This is where prices are deliberately set low to gain foothold in the market. Therefore firms’ can attract customers to the product and over time as the firm becomes more established, it is able to raise prices. However incumbent firms’ can also reduce prices as a way to maintain their own market share in competitive markets.

Competition within the industry as well as market supply and demand conditions set the price of products sold.

According to an article written by Theo Miller from Forbes Magazine titled “ The Amazon And The UX Of Advanced Targeting”, the author states that “price discrimination is a crime… and It's a violation of someone's privacy to change a price based on their profile”. Throughout this paper, I will examine this new “advanced Targeting” that is being done by Amazon and other companies alike and prove that price discrimination can be legal, and how vital it is for firms to differentiate between their customers. Through this analysis, the effect of price discrimination on consumers and producers will be apparent, as well as its effect on the demand and supply in the market.

Price discrimination is charging different people for different price for the same products or services. The benefits are higher income by extracting the consumer surplus and transforming it to supernormal profit and increase the market power. The disadvantage is purchasers have their doubts when their information are being captured and it is crucial for retailers to try to maintain trust. Otherwise firm may face scrutiny, such as Amazon and Staples did after their pricing experiments. Price discrimination is illegal when it is completed on the premise of race, religion, nationality, sex, or that it is infringing upon antitrust or