Q. Explain The Objectives of The Pricing Decision?

SILVER JUBILEE GOVT DEGREE COLLEGE (A),
KURNOOL.
MARKETING DIGITAL ASSIGNMENT.
Q. Explain the objectives of the pricing decision?.
A: Like other areas of marketing planning, pricing of products begins with the setting of pricing
objectives. Pricing objectives are the foundations for the price policies and strategy to be framed and
implemented in due course. The process of establishing objectives is structured by the firm's internal
environment. In fact, a very large number of price objectives are available. The point lies in that these
price objectives must be consistent with the organization internal thrust and compatible with external
environment.
The most widely accepted price objectives are outlined below :
1.Survival : Survival is the most fundamental objectives in most cases. Organisation tolerate almost any
kind of deficiency say short run losses internal organization, reduction in the size of operations and like in
order to continue in existence. Therefore, at least in the short run, some organisation price products
with objective of obtaining working capital for uninterrupted operations.
2. Target return on investment : Pricing for profit is the most logical price objective. Pricing to attain
predetermined profit involves the establishment of specific profit goals neither as a percentage of sales
or a R.O.I or return on investment. Price decision based on investment return are becoming very
common both in private and public sector undertakings, these days. That is the sale revenue arrived at
the end of the financial year on capital employed to cover all the costs and leave desired margin equal to
the rate of return.
3. Market share : Market share is really a meaningful measure of the success of a firm marketing
strategy. A makers share price objective can be either to maintain the market share, to increase it or
some times to decrease it. The company uses the price as an input to enjoy a target market share. Target
market share means that portion of the industry sale which a company aspire to attain. This market
share is normally expressed as a percentage of the total industry sales.
4. Cash-flow management : Products pricing decision are extremely important to the financial manager.
In the past, marketing plans did not, as a rule, make any enjoy major claim on a company cash reserves.
Today, the marketing world has change drastically. The rapid expansion of new product research and
decentralized distribution net-works and the explosion of aggression selling have made it necessary to
commit sums of money to marketing. Since there are many other demands with in the firm's it is quite
imperative that the price objective is to retain.
5. Price and profit stabilisation : Stabilising prices and profits can be a long term objectives of a firm.
Fluctuating prices having fluctuating profits bringing into play unwanted forces affecting the firm's
economic health and status in market place. Stabilisation of prices and margins is more in critical
industrial where oligopoly prevail. For example, in marketing of most basic details. It is an accepted
practice of the majority of the firm's to follow the price leader.
6. Resources mobilisation : Mobilising the resources for either self development or reinvestment else
where can be another price objective. Prices are deliberately set high in certain cases so as to make more
profit but to generate more surplus for the purpose of reinvestment in the same firm or other firms.
Thus, state trading corporation of Indian market. On such example, is important cars.
7. Meeting killer competition : Price can be used as a weapon to meet the competition or eliminate it.
Matching or marring the computers is the simplest strategy in case of those companies. That are more
interested in non price strategies. Meeting off competition implies keeping more or less same prices as
fixed by the compteters. Here quality and cost consideration are to be taken more or less indential. In
case of such price policy, consumer are at a loss to decide only by price.
8. Profit maximisation : Profit maximisation is the age-old objectives of pricing. Here, price policy
followed by the management helps the firm's to maximises it's earning under given market conditions.
Maximisation of profits is of the overall activities of the firm and not in case of each product item
because. It mean explosion and goes against the firm and not in case of each product item because, it
means profit maximisation can be a long term objective because, at the early stages of product life cycle,
there there is need for building up minimum market where sales volume which is possible with lower
prices and lower margins.
9. Maintaining the image : Every company has an identity from the moment it opens its doors. It is
identified repressing what it has done to convey the public. It is the public. It is the sum total of the
impression that the people have about the firm's. It is about its products, packages, trade marks, brand
namea, employee s graphics are the market programme and the like. This image is deeply influence by
how the company handles the delicate and sharp weapon of pricing. This image is deeply influenced by
how the company handles the delicate and high priced products will lose its current client if it goes in
company.
D. VEKATESWARLU
B.COM (G) FINAL YEAR
REGD NO: 16918

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SILVER JUBILEE GOVT DEGREE COLLEGE (A),

MARKETING DIGITAL ASSIGNMENT.

Q. Explain the objectives of the pricing decision?.

The most widely accepted price objectives are outlined below :

B.COM (G) FINAL YEAR

REGD NO: 16918

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