Factors affecting pricing strategies

You perhaps have seen bait-and-switch pricing tactics used to sell different electronic products or small household appliances. While fixing the prices of a product, the firm should consider the cost involved in producing the product. External Business Environment The External business environment and its influences are usually powerful forces that can affect a whole industry and, in fact, a whole economy.

Unfair trade laws are state laws preventing large businesses from selling products below cost as loss leaders to attract customers to the store. Since soft drinks are a consumable good, the augmented level is very limited. Promotion is also used to persuade the customers to try a new product, or buy more of an old product.

7 Factors That Will Influence Your Product Pricing Strategy

Distribution of the product must be efficient. Random Access Machines allow one to even more decrease time complexity Greenlaw and Hoover The marketer must Factors affecting pricing strategies a number of channel intermediaries and their expectations.

Environmental factors include economic development, culture, availability of alcohol, and the comprehensiveness and levels of implementation and enforcement of alcohol policies.

Many countries have since followed this game plan, a trend with lasting implications for future economic growth. Service providers, such as utility companies in markets in which they have a monopoly only one providerface more inelastic demand since no substitutes are available.

We will discuss more about price differences later in the chapter. If a business has low costs, then it can increase its sales and profit by lowering the price of its product or service. The final price for a product may be influenced by many factors which can be categorized into two main groups: Coca-Cola is currently in the maturity stage, which is evidenced primarily by the fact that they have a large, loyal group of stable customers.

Sometimes the customers are told the cheaper product is no longer available. The promotional activity undertaken by the firm also determines the price. For this purpose, such business keeps its price higher in order to cover the higher performance of its product along with the costs incurred on research and development.

Cost based Pricing, Market based pricing and Competition based Pricing. Pricing Methods Good pricing decisions are based on an analysis of what target customers expect to pay, and what they perceive as good quality.

Assignment Term Paper Executive summary Giant soft drink company Coca Cola has come under intense scrutiny by investors due to its inability to effectively carry out its marketing program. The point at which total costs equal total revenue is known as the breakeven point BEP.

Because small businesses lack the sales volume of larger companies, they may struggle to generate a sufficient profit when prices are too low. Image of the firm: Think about a pair of sweatpants with an elastic waist. Nintendo and its distributors in the European Union were charged with price fixing and increasing the prices of hardware and software.

Assignment Point - Solution for Best Assignment Paper

Sellers of Coca Cola products vary from major retail supermarkets to small corner stores. Thus, while fixing the prices, the firm must be able to recover both the variable and fixed costs.

In the age group 20—39 years approximately However, what one sees as complex and what one sees as simple is relative and changes with time. Coca Cola plan to further create positions that will give their products the greatest advantage in their target markets.There are many Factors affecting Sales of a Product.

They can be classified as Internal Sales factors or external sales factors. A company resorts to many means to overcome the obstacles and to have better sales. To get more sales, a company should know all these roadblocks and factors affecting.

Pricing Options. The value of equity options is derived from the value of their underlying securities, and the market price for options will rise or decline based on the related securities. In Chapter 2 “Strategic Planning” we noted that factors in the economic environment include interest rates and unemployment levels.

When the economy is weak and many people are unemployed, companies often lower their prices. In international markets, currency exchange rates also affect pricing decisions. Spann, Fischer, and Tellis: Strategic Dynamic Pricing for New Products Marketing Science 34(2), pp.

–, © INFORMS Nagle et al.p. ) and a penetration strategy for price-sensitive markets where new products usu.

The pricing decisions for a product are affected by internal and external factors. A. Internal Factors: 1. Cost: While fixing the prices of a product, the firm should. Factors Affect Price Decision. Pricing is all around us.

Asset Pricing Program

We pay for house rent, we pay for taxi, if need a laptop we must pay to buy it. Everything has a price.

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Factors affecting pricing strategies
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