What Are Three Crucial Objectives Of Price Policy

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.

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.

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.

Generally a firm set “prices to attract new customers or profitably retain existing ones”(300). A firm could set prices low so that competition cannot enter the market or set prices at competitor’s level to keep the market constant. In the Trader’s Joe example, all of their prices are exceptionally low for high priced things even Trader Joe’s products can’t even be found anywhere else. This helps to eliminate competitors in an extraordinary


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

As the price of the products is comparatively low, that will increase the purchasing power of the customer and they will buy in larger quantity and thus the company gains the profit. (Soni, P. (2016))

The setting of ‘fair’ prices to consumers: the company should bear in mind that customers nowadays will shop around to compare the intended products and services. However for the business survival and growth purposes, the company should also maintain its profit margins to ensure its business growth and expansion. The company needs to consider its cost factors and business operation areas to reduce or minimise the costing areas.

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.

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

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

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

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, 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).