Pricing objectives

From Academic Kids

Pricing objectives or goals give direction to the whole pricing process. Determining what your objectives are is the first step in pricing. When deciding on pricing objectives you must consider: 1) the overall financial, marketing, and strategic objectives of the company; 2) the objectives of your product or brand; 3) consumer price elasticity and price points; and 4) the resources you have available.

Some of the more common pricing objectives are:

  • maximize long-run profit
  • maximize short-run profit
  • increase sales volume (quantity)
  • increase dollar sales
  • increase market share
  • obtain a target rate of return on investment (ROI)
  • obtain a target rate of return on sales
  • stabilize market or stabilize market price: an objective to stabalise price means that the marketing manager attempts to keep prices stable in the marketplace and too compete on nonprice considerations. Stabilization of margin is bascially a cost-plus approach in which the manager attemptes to maintain the same margin regradless of changes in cost.
  • company growth
  • maintain price leadership
  • desensitize customers to price
  • discourage new entrants into the industry
  • match competitors prices
  • encourage the exit of marginal firms from the industry
  • survival
  • avoid government investigation or intervention
  • obtain or maintain the loyalty and enthusiasm of distributors and other sales personnel
  • enhance the image of the firm, brand, or product
  • be perceived as “fair” by customers and potential customers
  • create interest and excitement about a product
  • discourage competitors from cutting prices
  • use price to make the product “visible"
  • build store traffic
  • help prepare for the sale of the business (harvesting)
  • social, ethical, or ideological objectives
  • get competitive advantage


See also: marketing, pricing, strategic planning, price

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