Pricing Strategy

After setting pricing objectives the next decision a marketer must make is on pricing strategy. A pricing strategy is a plan or course for achieving pricing objectives. The strategy sets guidelines for achieving pricing objectives. Pricing strategies form an important component of an overall marketing strategy and they determine the role of price in the marketing mix. They may relate to the introduction of new products, competitive or economic condition, government regulation or the realization of pricing objectives. There are a lot of strategies open to a marketer in his effort to achieve marketing objectives.

Penetrating Strategy

Price penetration strategy is a typical pioneer pricing strategy adopted mostly at the introduction of a new product, and in other instances, such as the saturation and product decline periods. Price penetration sets a
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Pricing Objectives

Pricing objectives are overall goals that describe what the firm wants to achieve through its pricing objectives. Before setting prices, marketers should always begin by considering objectives, which are overall goals that describe the role of price in an organization’s long-range plans. Because pricing objectives affect decisions in other functional areas such as finance, accounting and production, the objectives must be consistent with marketing and organizational objectives.

Prices are set to meet both short term and long-term goals. Short-term goals relate to survival while long run pricing objectives derive directly from company objectives. They provide guidance to decision makers in determining price policies, formulating pricing strategies and setting actual price. Although the pricing objectives alone are not sufficient to identify the single best list price, they often help managers narrow the range of possible prices.

Most companies have profit as a main pricing objective, other objectives such as market share, competition,

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Pricing Decision

Price is an element of the marketing mix. As a result, it is a major decision area for marketing management as it is the only element of the marketing mix that produces revenue. This is to say it is through price that the profit maximization objective of marketing is achieved.

It is also true that price means different things to different people; the buyer and the seller inclusive. Different people depending on the transaction that is taking place therefore call it different names. These and other issues affect the marketer as will be seen on in this article.

Meaning of Price

Ordinarily speaking, price is the amount of money that customers pay for product. This definition is deficient
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