the eyes of the buyer hence little flexibility in price because no one seller

The eyes of the buyer hence little flexibility in

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the eyes of the buyer hence little flexibility in price because no one seller can lead the others example, vegetables/small way side eateries. 5.4 INTERNAL INFLUENCES ON PRICING DECISIONS Pricing is also influenced by internal factors. It needs to reflect both corporate and marketing objectives consistent with the rest of the marketing mix. (i) Organizational Objectives Linked with corporate strategy, marketing plans not only have to satisfy the customers’ needs but also reflect aspirations of the organization. Corporate strategy can be concerned with the organization’s relative position in the market compared with competition. Pricing can be used as a tool to take leadership: Price leadership – by offering lowest price. Example, many value stores offering products at very low price where they create a leadership in terms of value for money. Quality/premium position leadership – by offering high quality at a high price. Organizational objectives can change over time, as organizations and markets evolve over time – for example at an entry level, where survival itself may be a problem, they may price very low to establish themselves in the market. 66
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PRICING (ii)Marketing Objectives Focused on specific target markets and position desired within them, an organization may have several products in separate segments requiring different pricing approaches Maruti selling 800 as well as SX 4. Different approaches may be taken at different stages of the Product Life Cycle, also (iii)COSTS While pricing primarily relates to what the customers are willing to pay it cannot be oblivious to costs. While as a strategy, one may sell not recovering total costs, one cannot price at below variable costs. We’ll see more of this a bit later. 5.5 PRICING STRATEGIES Objectives Understand managerial process that leads to price settings and influences that affect its outcomes. Appreciate the multiple and sometimes conflicting objectives impacting pricing decisions define range of available pricing strategies and their applications in different markets and competitive situations. Understand available pricing methods and tactics and their most appropriate use appreciate some of the special issues affecting pricing in B2B markets. 67
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PRICING Determining a price range overview Fig. no.: 5.4 Since price is a delicate balance between serving customers needs/wants and simultaneously serving the need of the Organization to recoup its costs of manufacturing/marketing and to make profit, pricing objectives should be closely linked with organizational and marketing objectives. Some may be financially based, while others may be related to sales volumes example, in a short run the finance department may be facing a cash flow problem prompting the marketing department to liquidate inventory at a lower price, or at another stage the marketing strategy may want to kill the competitor for long term survival and may use low price as a tool.
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