Which term refers to a pricing objective that maintains existing prices or meets the competitions prices?
|
Show
Pricing objectives are the goals that guide your business in setting the cost of a product or service to your existing or potential consumers. A pricing objective underpins the pricing process for a product and it should reflect your company's marketing, financial, strategic and product goals, as well as consumer price expectations and the levels of your available stock and production resources. Some examples of pricing objectives include maximising profits, increasing sales volume, matching competitors' prices, deterring competitors – or just pure survival. Each pricing objective requires a different price-setting strategy in order to successfully achieve your business goals. It requires you to have a firm understanding of both your product attributes and the market. Your choice of a pricing objective does not have to last forever. As business and market conditions change, adjusting your pricing objective may become necessary or appropriate. How to Choose a Pricing ObjectivePricing objectives are selected with your business and financial goals in mind. Elements of your business plan can guide your choice of a pricing objective and the strategies that go with it. Give due consideration to your business’s mission statement and plans for the future. If one of your overall business goals is to become market leader then you’ll want to consider the quantity maximisation pricing objective as opposed to the survival pricing objective. If your business mission is to be a leader in your industry, you may want to consider a quality leadership pricing objective. On the other hand, profit margin maximisation may be most appropriate if your business plan calls for growth in production in the near future, since you will need funding for facilities and labour. Some objectives, such as survival and price stability will be used when market conditions are poor or shaky, when first entering a market, or when a business is experiencing hard times and needs to restructure. Pricing for ProfitThis objective is aimed, simply, at making as much money as possible for your business – and to maximise price for long-term profitability. Price has both a direct and indirect effect on your profits - the direct effect relates to whether the price actually covers the cost of producing the product. Price affects profit indirectly by influencing how many units sell. The number of products sold also influences profit through economies of scale, i.e. the relative benefit of selling more units.
Sales-related ObjectivesSales-oriented pricing objectives seek to boost volume or market share. A volume increase is measured against a company's own sales across specific time periods. A company's market share measures its sales against the sales of other companies in the industry. Volume and market share are independent of each other, as a change in one doesn't necessarily activate a change in the other. The main sales-related pricing objectives include:
Competition-related ObjectivesEvery company tries to react to their competitors with appropriate business strategies. With reference to price they may wish:
Increasing prices doesn't automatically mean losing customers. - Peter Hill Customer-related ObjectivesCustomers should be central to every marketing decision so, in order to keep customers on your side you need suitable pricing policies and practices to win the confidence of customers: Customers are your "targets". Your company should be setting its pricing policies to win over the confidence of your target market. By appropriate pricing, you can establish, maintain or even strengthen the confidence of customers that the price charged for your product(s) is fair and that they are not being cheated. To increase customer satisfaction: to satisfy customers should be the prime objective of all marketing efforts and pricing is no exception. Your company should set, adjust, and readjust its pricing to satisfy its target customers. In short, design pricing in such a way that results in maximum customer satisfaction. Market PenetrationThis objective is concerned with entering deep into the market to attract the maximum number of customers. This objective calls for charging the lowest possible price to win price-sensitive buyers. A penetration strategy might be right for you if you are in a position to rapidly gain market share, bring down unit costs and purposefully price low to create barriers to entry: think Amazon, Uber, Facebook. You will make a grab for market share and then expand but must appreciate that a penetration strategy is most risky from a profit and revenue standpoint. You will need to be able to gain huge market share rapidly and follow through on future price increases. If you gain customers early in such markets you are better positioned to maximise customers' lifetime value from future sales and upsells. SkimmingThis expression comes from the farming practice of milking cows - the cream rises to the top and you skim it off. From a business perspective, this pricing objective is concerned with skimming maximum profit in the initial stage of a product's life cycle. Because the product is new, offering new and superior advantages, your company can charge a relatively high price because you are catering to customers with a higher willingness to pay, i.e. the early adopters. Certain customer segments will buy a product even at a premium price in order to be ahead of the game. Later you can aim at more price-sensitive consumers with a lower price. Some prime examples are purchasers of movies, music, online games, gaming consoles (Microsoft Xbox), smartphones (iPhone) and luxury vehicles. The advantage of using a Skimming pricing policy is that you can theoretically get the maximum profit from each level of customer. You need to bear in mind however that you can only charge the high price for your product when there are no close substitutes. StabilisingThis objective seeks to keep your product prices in line with the same or similar products offered by your competitors to maintain a stable level of profit generated from a particular product – or to avoid starting a price war where no one wins. It's a tactical goal that encourages competition on factors other than price and focuses on maintaining market share. Stability in price makes a good impression on your buyers - frequent changes in pricing can adversely affect the prestige of your company. SurvivalThis is perhaps the most fundamental of all pricing objectives. Pricing is aimed at survival with a hope for growth in the (not too far distant) future. Your company may use a survival-based pricing objective when it's willing to accept short-term losses for the sake of long-term viability. Under this objective, pricing can be flexible – prices are lowered in order to increase sales enough to keep the business going, i.e. cover essential costs. For a short term, on a temporary basis, the goal of making a profit is set aside for the objective of survival. Once the situation that initiated the survival pricing has passed, product prices should be returned to previous or more appropriate levels.
Bài Viết Liên Quan
Bản quyền © 2021 thattruyen.com Inc.
|
