Discussion Forum Unit 8 PDF

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Discussion Forum Unit 8...

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Different firms have different objectives when it comes to pricing for their products or services. Companies set prices for their products in order to increase revenue (INDEX CITATION: Book). The profit oriented pricing objectives include cutting costs such as cutting jobs, reducing inventory, and the space they rent or lease to keep those inventory. Also, companies create programs in order to increase customer loyalty(INDEX CITATION: Book). Some companies upgrade their products to much higher quality and also make the check out process much eater for consumers (INDEX CITATION: Book). Hence, more customers will be attracted and the company will have the potential to maximize profits. Maximizing sales are generally a short-term objective for companies as they may be running short on cash but have commitments that needs to be fulfilled quickly. If that is the case, the companies may ending up selling more of their inventory and reducing prices for their products, which will potentially boost sales (INDEX CITATION: Book). Factors that organizations consider when making pricing decisions include the costs associated with the offerings, the demand for that offering in the markets and the buyers’ response for the offerings. Also there are external factors that influence the pricing decision making process, such as , government regulations, the offering’s current stage in the product life cycle, as well as the economy. Penetration Pricing is a technique which involves selling the offerings at lower prices initially in order to attract more and more consumers. This way the company will be able to penetrate the market and later on, once their product is well recognized by the consumers and well established, down the road, they may consider increasing the price. In Penetration Pricing technique, large quantities of products will be sold. Conversely, in the Skimming Pricing technique, the firm sells the offering at higher price initially in order to gain maximum profit (INDEX CITATION:https://keydifferences.com/differencebetween-penetration-pricing-and-skimming-pricing.html). Since the price is high, the quantity of the product sold will be less.

References JEFF TANNER, M. A. (n.d.). Principles of Marketing. New York: Flat World Knowledge https://keydifferences.com/difference-between-penetration-pricing-and-skimming-pricing.html...