Services Marketing Internal factors affecting pricing decision Generally, internal factors can be controlled or altered. There are certain internal factors like organizational policies, differentiation in services, cost or service and marketing mix that affects pricing decision a lot. They are discussed briefly below. Internal factors affecting pricing decision 1.
Pricing decisions occur on two levels in the organisation. Over-all price strategy is dealt with by top executives. They determine the basic ranges that the product falls into in terms of market segments. The actual mechanics of pricing are dealt with at lower levels in the firm and focus on individual product strategies.
Usually, some combination of production and marketing specialists are involved in choosing the price. Marketing experts view price as only one of the many important elements of the marketing mix. A shift in any one of the elements has an immediate effect on the other three—Production, Promotion and Distribution.
In some industries, a firm may use price reduction as a marketing technique. Other firms may raise prices as a deliberate strategy to build a high-prestige product line.
In either case, the effort will not succeed unless the price change is combined with a total marketing strategy that supports it. A firm that raises its prices may add a more impressive looking package and may begin a new advertising campaign.
The price of the product also depends upon the characteristics of the product. In order to attract the customers, different characteristics are added to the product, such as quality, size, colour, attractive package, alternative uses etc.
Generally, customers pay more prices for the product which is of the new style, fashion, better package etc. Cost of the Product: Cost and price of a product are closely related. The most important factor is the cost of production.
In deciding to market a product, a firm may try to decide what prices are realistic, considering current demand and competition in the market. The product ultimately goes to the public and their capacity to pay will fix the cost, otherwise product would be flapped in the market.
Objectives of the Firm: A firm may have various objectives and pricing contributes its share in achieving such goals. Firms may pursue a variety of value-oriented objectives, such as maximizing sales revenue, maximizing market share, maximizing customer volume, minimizing customer volume, maintaining an image, maintaining stable price etc.
Pricing policy should be established only after proper considerations of the objectives of the firm. The market demand for a product or service obviously has a big impact on pricing. Since demand is affected by factors like, number and size of competitors, the prospective buyers, their capacity and willingness to pay, their preference etc.
A firm can determine the expected price in a few test-markets by trying different prices in different markets and comparing the results with a controlled market in which price is not altered.
If the demand of the product is inelastic, high prices may be fixed. On the other hand, if demand is elastic, the firm should not fix high prices, rather it should fix lower prices than that of the competitors.
Competitive conditions affect the pricing decisions. Competition is a crucial factor in price determination. A firm can fix the price equal to or lower than that of the competitors, provided the quality of product, in no case, be lower than that of the competitors.
Suppliers of raw materials and other goods can have a significant effect on the price of a product. If the price of cotton goes up, the increase is passed on by suppliers to manufacturers.
Manufacturers, in turn, pass it on to consumers. Sometimes, however, when a manufacturer appears to be making large profits on a particular product, suppliers will attempt to make profits by charging more for their supplies.Internal factors affecting pricing decision.
1. Organizational policies: Organizational policies provide guidelines for taking decisions. The pricing policies differ from one organization to another.
A firm may prefer a particular public image through its pricing policies. Pricing policies are the internal factors that influence pricing. Factors That Affect Pricing Decisions by University of Minnesota is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike International License, except where otherwise noted.
Factors that impact pricing decisions include internal factors like the marketing objectives for the organization, and external factors such as the nature of the market, competition and demand.
Marketing will determine a strategy for the product, which greatly impacts the proposed pricing for a product. Internal Factors – When setting price, marketers must take into consideration several factors, which are the result of company decisions and actions.
To a large extent, these factors are controllable by the marketer and, if necessary, can be altered. Course 6 of 7 in the Specialization Value Chain Management In this course, you will further examine how businesses create value for customers.
In Marketing Management I, you learned the major elements of the marketing mix - product policy, channels of distribution, communication, and pricing - and.
Who determine the price structure of a product, top management, CEO, the entrepreneur, answer is no. Basically two factors, which affect the company price decision and strategy.
Pricing Product, External and Internal Factors Affecting Pricing Decisions. Sun, 07/31/ Internal Factors Affecting Price. Internal factors affecting pricing include: Marketing Objectives; Government policies can also affect the price taking decision. Tags: pricing. Factors that impact pricing decisions include internal factors like the marketing objectives for the organization, and external factors such as the nature of the market, competition and demand. Marketing will determine a strategy for the product, which greatly impacts the proposed pricing for a. Factors that impact pricing decisions include internal factors like the marketing objectives for the organization, and external factors such as the nature of the market, competition and demand. Marketing will determine a strategy for the product, which greatly impacts the proposed pricing for a product.
1. Internal Factors Affecting Price.