PRICING DECISIONS AND STRATEGIES
Ways how a company modifies sales prices:
Change the amount of money
Change the quantity of products
Change the quality of products
Change the conditions of the transfer of ownership
Modify the times and places of payment
Modify the prizes or discounts
REASONS THAT SHOW THE IMPORTANCE OF PRICE
Sales volume: this is determined by the elasticity of the demand curve
Profitability: this is determined by the relationship between the quantity sold and the price
Differentiation: the price can give advantages over the competition
Perception: the price can be used by consumers to give value to the product
FACTORS INFLUENCING PRICE SENSITIVITY
Uniqueness of the product: the more exclusive the less the price matters
Knowledge of substitute products: the more they are known, the more importance is given to the price
Ease of comparing products: the more you can compare, the more importance is given to the price
Importance of the price in the final expense: it is more important when it represents a significant expense
Shared cost: when the cost is shared with others, the price does not matter.
Amortized purchases: when the product is a complement to another previously acquired, the price goes to the background
Perceived quality: when the product is of higher quality, the price is no longer important
Storage: the more perishable the product, the more important the price.
FACTORS INFLUENCING PRICE SENSITIVITY
Goals focused on profit
The objective is to obtain the greatest profit or benefit from the sale of the product
Profit maximization
The price is set so that the profit is sufficient taking into account the investment made
Sales-focused goals
It seeks to gain market positioning for which the lowest possible sale price will be set taking into account the demand and costs
Maximization of the sales figure
In order to obtain the best sales figures, the price of the product is raised taking into account demand and costs in the same way.
Competitor-focused objectives
It is a short-term objective since it is set as an emergency measure to overcome difficult situations
Objectives are set taking into account the prices given by leading companies in the market
It is to achieve equal price with the competition
WHAT´S THE OBJECTIVES
After understanding the target market and the time horizon, you should set short, medium and long-term objectives.
INTERNAL CONDITIONS IN PRICING
Objectives
Marketing strategies
Costs