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
  • 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

See also: marketing, pricing, strategic planning, price

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