Pricing objectives

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:
1)maximize long-run profit

2)maximize short-run profit

3)increase sales volume (quantity)

4)increase dollar sales

5)increase market share

6)obtain a target rate of return on investment (ROI)

7)obtain a target rate of return on sales

8)stabilize market or stabilize market price: an objective to stabilize price means that the marketing manager attempts to keep prices stable in the marketplace and to compete on non-price considerations. Stabilization of margin is basically a cost-plus approach in which the manager attempts to maintain the same margin regardless of changes in cost.

9)company growth

10)maintain price leadership

11)desensitize customers to price

12)discourage new entrants into the industry

13)match competitors prices

14)encourage the exit of marginal firms from the industry

15)survival

16)avoid government investigation or intervention

17)obtain or maintain the loyalty and enthusiasm of distributors and other sales personnel

18)enhance the image of the firm, brand, or product

19)be perceived as “fair” by customers and potential customers

20)create interest and excitement about a product

21)discourage competitors from cutting prices

22)use price to make the product “visible"

23)build store traffic

24)help prepare for the sale of the business (harvesting)

25)social, ethical, or ideological objectives

26)get competitive advantage