Question

Describe three main factors that impact pricing decisions.

marketing

Answer 1

There are varied and multiple factors affecting pricing decisions. In essence, the prices of products and services are determined by the interplay of five factors, namely, the conditions of demand and supply, production and associated costs, competition, the negotiating power of the buyer and the perceived value. As internal factors and external factors, we would like to divide them.

Pricing targets may be as previously stated–revenue goals (return on sales investment and income maximization), sales goals (increasing sales volume and increasing market share) and maintenance goals (price stability and competition matching). Different pricing priorities have significant implications for the competitive strategy of a firm. Pricing goals must not conflict with the company's marketing goals.

Other marketing mix elements strongly influence the price of a product or service. The life cycle of the product through which the product moves, or the form of sale (lease versus overnight purchase, or liberal return policy may be followed). The price is likely to be high in the introductory product life cycle or liberal return policy. Where the consumer includes equipment and resources. The channels involved in distribution, warehousing location and transportation also influence the determination of prices. The manufacturer may be able to charge a lower price directly to the customer, but selling through many intermediaries means that the final price is very high to compensate the intermediaries ' efforts.

Businesses can charge higher prices for vertically differentiated product lines. Companies often add a high price item to the line to increase demand for a mid-level price product. This appears to be identical for goods in a vertically separated line of products. Retailers charge the same for different flavours of yogurts, same price for clothes of different sizes. All manufacturers of cars have different prices for different segments of the market, namely economy cars, family saloons, executive cars, etc.