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Role of Pricing
a. Its used as a sales promotion
technique eg. Discounts, incentives to
dealers.
b. Its a tool that determines the
profitability of firm.
c. Effective tool to face competition
d. Acts as a demand regulator and
control demand for the products of
the company.
Objectives of Pricing
Survival
Profit objective
Prevent new entry
Image differentiation
Early cash recovery
Sales objective increase in market
share, increase sales.
Market skimming
Social responsibility
Cost
Product
Product Life cycle
Image of firm
Objective of firm
Promotional activities
Credit policy
Competition
Demand
Consumer
Government condition
Economic condition
Channel of distribution
Pricing Process
Set pricing objectives
Continuation
Target audience doesnt mind to pay high
prices
Advantages of skimming pricing strategy
It enables higher profits per unit sold during
initial stages of the product
It helps to recover development and launch
costs within a short period of time.
It brings prestige status to the user, as only
high class of the society can afford to pay
high prices.
Continuation
Advantages:
It helps to capture large share of
market.
It discourages potential competitors
to enter the market due to low
profits.
A firm can enjoy economies of large
scale production and distribution.
Meaning
Purpose: To make high
profit within a short time
of product introduction.
Target: limited market
segment.
Promotional Expenditure:
heavy promotional
expenditure per unit.
Economies of scale: its
not enjoyed.
Meaning
Purpose: To enter a
market which is
competitive and capture
it.
Targeting the mass.
Promotional
Expenditure:
promotional expenditure
per product is very less.
Economies of scale: its
enjoyed here.
Discount policies