Describe the Five Ways That Pricing Affects Product Decisions

When consumers are very sensitive to the price change of a productthat is they buy more of it at low prices and less of it at high pricesthe demand for it is price elastic Consumers are very sensitive to price changes and buy more at low prices and less at high prices. Costselling price must make up for any costs spent supply and demandwhat people want and can afford economic conditionsbusinesses and individuals increase spending which increases demand competitioncustomers compare prices to get the best buy government regulationstate and federal laws affect pricing channel memberseach member of.

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Consider if the company is coming into a new market and what the competition is doing.

. Having a pricing objective isnt enough. In order to attract the customers different. Customers are baited by ads for a productservice at a low price.

Then customers discover that the productservice isnt available and are switched to a more expensive item. Market demand for a product or service has great impact on pricing. There are some external factors affecting pricing decisions of the business.

There are product factors and non-product factors. Prestige pricing occurs when a higher price is utilized to give an offering a high-quality image. Products Stage in the Life Cycle of the Product.

Economic environment of the country is an important factor affecting the pricing decisions. A firm also has to look at a myriad of other factors before setting its prices. Cost-plus pricing Target return pricing Value-based pricing Psychological pricing and haggling.

If the product is innovative. Such as the costs price and offering of the competitors as compared to its own cost price offering. Customers competitors the quality of the product product costs as well as profit maximization.

When it comes to choosing one product versus another consumers whether consciously or subconsciously weigh a variety of factors. Internal factors include the companys marketing objective costs and marketing strategy. The price of the product also depends upon the characteristics of the product.

Companies that make simple pricing decisions often try to increase sales by making small competitive adjustments such as purchase discounts volume discounts and purchase allowances. Pricing decision is affected by the stage of product in its life-cycle. The common ones are group into four as follows.

A companys pricing decisions are affected by both internal and external factors. If there is no demand for the product. External Factors Influencing Pricing Decisions.

Inflation is a rise in the average price level of goods and services in an economy over a period of time. Main factors affecting price determination of product are. The Utility and Demand 3.

There are many factors influencing pricing decisions. The most important factor affecting the price of a product is its cost. We would like to divide them as.

How pricing affects promotion decisions. Extent of Competition in the Market 4. Among the many factors influencing the pricing decisions the three major influences are customers competitors and costs.

Government and Legal Regulations 5. Basically the prices of products and services are determined by the interplay of five factors viz demand and supply conditions production and associated costs competition buyers bargaining power and the perceived value. This means that the management of the business should take into account the change in the price.

Differences in Quality standards influence pricing decision. This is because the marketing mix is decided as per. Differences in Services rendered influence pricing decision.

1 STP Marketing mix is the second step in a marketing strategy. Durable goods such as TVs stereos and freezers are more price elastic than necessities. Pricing decision as a long-run decision or short term decision or a onetime spare capacity decision.

Market Conditions influence pricing decision. I dont even need to stress much on this. Pricing decisions occur on two levels in the organisation.

Here are four ways to calculate prices. This type of pricing is determined through negotiation with. Some stores have a quality image and people perceive that perhaps the products from those stores are of higher quality.

3 Promotions The major factor due to which marketing. 2 Product What are the product features and benefits being offered to the customer. 5 Non-Product Factors That Influence Purchase Decisions.

A Internal Factors and B External Factors. Inflationary and deflationary conditions will also affect the pricing decision of a company. Factors Influencing Pricing Decisions.

Those factors include the offerings costs the demand the customers whose needs it is designed to meet the external environmentsuch as the competition the economy and government regulationsand other aspects of the marketing mix such as the nature of the. The influencing factors for a price decision can be divided into two groups. Managers examine pricing problems through the eyes of their customers.

Complex pricing is based on the originality of a product or service and what customers are willing to pay for it. External factors include the nature of the market demand competition and external factors. Costs Prices Offering of Competitors.

Reaction of Competitors influence pricing decision. As an entrepreneur you should know that economic factors such as taxation rate labor cost inflation rate currency exchange rate governments fiscal and monetary policy will definitely influence your adopted product pricing strategy either positively or negatively. In an effort to organize these factors it would be appropriate to create two distinct categories.

Size of the Company influence pricing. Over-all price strategy is dealt with by top executives. In the introductory stage of the product it the price strategy which determines the price of the product.

Many times two different stores carry the same product but one store prices it higher because of the stores perceived higher image. Factors influencing pricing decisions. There has been a revolutionary change experienced.

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