Document (10) - Principles of Marketing BUS 2201 ASSIGNMENT PDF

Preview

Summary

Principles of Marketing BUS 2201 ASSIGNMENT ...

Description

Review the material in Chapter Fifeen on Price.  Subscribed Which pricing objectves are profit-oriented, and which objectves are sales-oriented? What factors do organizatons consider when making pricing decisions? Explain the difference between a penetraton and skimming pricing strategy.

Pricing objectives are what a company wishes to achieve with its price of its products or services. This can be achieved by estimating the demand quantity for the product while determining the costs. Factors associated with pricing should be analyzed, such as internal and external factors, where competition for the product is to be considered and such issues as government regulation, the cost of producing the product, promotional costs and even logistic costs, all should be considered when making a pricing objective. Pricing objectives can be in form of profit-oriented or sales- oriented or status quo (Tanner & Raymond, 2010, p.309) Profit -oriented objective is where companies aim to make as much revenue as possible through using Return on Investment method and maximizing profit method. In a ROI system, the company sets a certain percentage of a amount they hope to get from selling the product in relationship to the investment they put to produce the product(Tanner & Raymond, 2010,p.309). A company can set its price for a product to get a 5% profit when all expenditure is deducted. When a company uses a maximizing profit method, the company sets a price to increase revenues through cutting costs on either on the production, logistics or salaries. It can find ways to make customers trust the company or products or services and become regular buyers through being loyal to the brand. Price reduction is also used as a way of selling many good/services with the aim of maximizing profits. Companies may have promotional sales so as to attract customers. Companies can also add features on a product and attract new customers as well.

Sales-oriented objectives are where a company would increase its revenues through making high volumes of sales per product/service. To achieve this, companies employ methods such as maximizing sales and maximizing market share. Maximizing sales generate as much revenues as possible in a short run time. This can be achieved by cutting down prices so that the company can sell all inventories at a targeted period of time (Tanner & Raymond, 2010,p.309). Maximizing market share is whereby a company sets prices to attract a large market capacity which can lead to the company having the largest share of customers per market (Tanner & Rymond,2010,p.3100. The companies that practices this pricing objective method fight for their own survival. Offering pricing decisions have many factors that affect them. Offering costs is one of the biggest affecting factor, where before making decisions about the price, marketers should make sure they know what is the total cost for the production and distribution of the product. Demand influences the price as well, as we know that the higher the demand, the high the price, vice versa. Customer value and satisfaction plays a big role of pricing. It does not make sense to charge more for a worthless product/service. The external forces also play a significant role when making a pricing decision. Government regulations, taxes, the status of the economy and competition the product faces will determine what price the product should be marked. Marketing mix also affect the pricing decision making because the stage at which the product is on the product life cycle also directs what price it should bear. Penetration and skimming pricing strategies are different in the life cycle stage a product or service is. In skimming, it is probably when the product is at is introduction stage where innovators and early adaptors can buy the product. The company sets high prices for those

willing to buy the product. While the penetration strategy is used for a product at its maturity stage, where a company offers a low price to attract a large number of buyers usually because the product has saturated the market. Tanner, J. & Raymond, M. A (2010). Principles of Marketing. NY. Flat World Knowledge.Inc....