Prising — страница 2

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pricing departments, which determine prices or help the others do it. Such employees as sales department managers, production supervisors, finance managers and accountants are those who also influence the price policy. First of all a firm must determine what purposes it intends to reach with the help of the concrete goods. If the choice of a target sector of the market is well considered the approach to forming the marketing complex including pricing problems is quite evident. The pricing strategy is generally determined by decisions that were made concerning a certain position in the market. At the same time a firm can chase other targets. The clearer a firm’s idea of its target the easier to determine a price. There are plenty of examples in practice: providing survival of

the firm, maximizing current profits, winning leading positions in the market reaching the high quality of commodities. Providing company’s survival becomes the general purpose under the circumstances of hard competition and when there are too many producers in the market. It’s also true in case of rapid change of the customers’ needs. To provide the work of enterprises and sales of their goods firms have to state lower prices in hope to get a favorable customer’s respond in return. Survival is more important than profits. While the prices reduced cover the production costs firms that get into a difficult situation can continue their commercial activity for some time. Plenty of the firms aspire to maximize their current profits. They estimate customers’ demand and costs

taking into account different levels of prices and then they chose the price that will provide the maximization of future profits and cash and also provide maximum of costs compensation. In all these cases current finance indicators (indexes) are more important for a firm than the long-run ones. Other firms want to be leaders in the market share indicators in hope that a company getting the biggest market share will have the lowest level of costs and the highest profits in the long run. Trying to reach the leadership in the market share they undertake the maximum possible decrease in prices. A variant of this purpose is to rapidly get the concrete increase of the market share. A firm can also make its goods the most qualitative among all the rest offered in the market. Usually it

demands to determine a higher price to cover the costs for reaching high quality and conducting expensive surveys. To determine a price taking into account the level of current prices a firm usually leans on its competitors’ prices and pays less attention to its own indexes of costs and demand. Under the circumstances of oligopoly activity all the firms usually ask for the same price. The smaller firms “follow the leader” changing their prices when the leader changers them, not concerning the fluctuations of the demand for their goods. Some firms can take off a small extra charge as a premium or grant a small discount keeping the difference in the permanent price. Such method of pricing is quite popular. The seller must take into account not only economic but also

psychological factors of the price. Many consumers suppose that the price must reflect the quality of merchandises. Some firms manage to increase the sales by raising prices for their goods and such goods will be considered more prestigious. Such method of pricing based on the goods prestige is also quite effective, especially concerning, for instance, perfume or expensive cars that can cost ten times cheaper but customers pay ten times higher considering that the price assumes something special. There exists one else, unofficial law of pricing, which is very popular practically among all the sellers. Price should be expressed in a odd figure. For example instead of $200 they put $199. And then for the plenty of consumers this merchandise will cost $100 and plus but not just

$200. The chosen price must be checked whether it corresponds to the existing price policy. Many firms work out purposes concerning their favorable price image granting discounts and taking relative measures in respond to the price activity of their competitors. In recent several years plenty of the firms have to higher their prices. Doing so they understand that increase of prices will result in the displeasure of their customers, distributors and own sales personnel. Nevertheless, the successful increase of prices can considerably enlarge the volumes of profits. One of the main condition affecting the increase in prices is the constant worldwide inflation caused by highering level of costs. The increase of costs not corresponding to the production growth leads to the decrease