Concept of pricing decision and its aim is important in context of marketing management.
Price is the amount charged by the manufacturer for the goods and services which he is giving to the consumer. Among four p’s of marketing mix only price generates revenue and profit to the company.
For a manufacturer price = the quantity of the money received by the firm
For a consumer price = the quantity of the goods and services received by the buyer.
Objectives of pricing decision
1. The main objective of pricing is that the firm should maximize the profit.
2. The firm must get minimum return on investment.
3. The firm must get specified market share.
Price determination procedure
1.) Price determination starts with identification of target market.
2.) Next step is to know about the product’s market position.
3.) Then price elasticity of the product is considered.
4.) Then product life cycle is also decided.
5.) Competitor’s price is also keep in mind.
6.) Environmental factors are also considered.
7.) At last suitable price is selected.
8.) Than, the price, its methods, procedures are reviewed periodically.