MANAGERIAL ECONOMICS PRICING POLICIES AND PRACTICES PRICING POLICIES

MANAGERIAL ECONOMICS

PRICING POLICIES AND PRACTICES

PRICING POLICIES IT IS THE MAIN SCOPE OF ME PRICE IS THE MONEY VALUE OF THE GOODS AND SERVICES ONCE A PRODUCT IS READY TO SALE, THE FIRM HAS TO FIX PRICE FIXING IS ACCORDING TO THE CONDITIONS IN THE MARKET FIRM’S REVENUE EARNINGS LARGELY DEPEND UPON ITS PRICING POLICY

FACTORS TO BE CONSIDERED IN THE FORMULATION OF PRICING POLICY v PRICE OF COMPETITOR’S PRODUCT v COST OF PRODUCTION AND DISTRIBUTION v IMPLICATIONS OF DISCRIMINATORY PRICES OF DIFFERENT CUSTOMER GROUPS v PRICES OF DIFFERENT ITEMS IN THE PRODUCT LINE v SCOPE OF CHANGING PRICES v OBJECTIVES OF THE BUSINESS v MARKET POSITION v PRICE ELASTICITY AND DEMAND ELASTICITY

STEPS IN FORMULATING PRICING POLICIES SELECTING THE TARGET MARKETS AND MARKET SEGMENTS ii. STUDYING THE CUSTOMER BEHAVIOUR AND COLLECTING INFORMATION iii. STUDYING THE PRICES, PROMOTION STRTEGIES etc , OF THE COMPETITORS AND THEIR IMPACT iv. ASSIGNING A ROLE TO PRICE IN THE MARKETING MIX v. CALCULATING THE COST OF MANUFACTURING vi. FIXING A SUITABLE PRICE i.

OBJECTIVES OF PRICING POLICIES 1. PROFIT MAXIMISATION IN THE SHORT TERM 2. PROFIT OPTIMISATION IN THE LONG RUN 3. PRICE STABILIZATION 4. FACING COMPETITIVE SITUATION 5. MAINTANANCE OF MARKET SHARE 6. ENTRY INTO NEW MARKETS 7. CAPTURING THE MARKET 8. GOODWILL AND PRESTIGE 9. SURVIVAL AND GROWTH 10. RESOURCE MOBILISATION

METHODS OF PRICING 1) 2) 3) 4) 5) 6) 7) 8) COST PLUS PRICING TARGET PRICING MARKET COST PRICING DIFFERENCIAL PRICING GOING RATE PRICING CUSTOMERY PRICING FOLLOW UP PRICING BAROMETRIC PRICING

Once a company has developed a product, it has to decide how to price it. Unfortunately there are no easy answers. The price must be fixed judiciously. price is only one element in the bundle of satisfactions that constitutes a product.