what are the basic factors affecting pricing?

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Not Adequate Supply from Few Competitors: The competitor can enter the market with the ‘ME TOO’ pricing of the market leader. For example, Maharashtra has very high VAT on fuel and truckers buy high quantity of fuel before they enter Maharashtra. The current players then were Godrej, Kelvinator, Voltas and Alwyn etc. Huge Collection of Essays, Research Papers and Articles on Business Management shared by visitors and users like you. As an entrepreneur, you should know that economic factors such as taxation rate, labor cost, inflation rate, currency exchange rate, government’s fiscal and monetary policy will definitely influence your adopted product pricing strategy either positively or negatively. 6 things that affect hotel room prices. Two, three, four units combined to get a price off. What is Brand Loyalty and steps to increase Brand Loyalty? The price charged should cover the unit cost of production and earn a reasonable profit. The market demand for a product or service has a big impact on it pricing. 1. Understand the factors that affect a firm’s pricing decisions. External Factor 2. Expert Answer . Having a pricing objective isn’t enough. Many times when brand loyalty and product differentiation between competitors is low, the customer may purchase an alternate product and refuse to accept delivery of stocks ordered earlier leading to costs without effecting sales. E.g. Posted one year ago. Furthermore, today, on account of the various lines of production as well as distributing, the overhead costs finding the cost of production is not so simple. It involves finding I out cost per unit and adding necessary profit with the cost of production to arrive at the price. For example, an organisation can sell its products through ecommerce, or wholesalers and retailers, etc. For example, when BOOST was launched, it talked about being ‘more creamy and more chocolaty’ and so was launched at a premium price even when the competitor Bournvita was holding a near 100% market share. Following types of promotional pricing methods are used: Many organizations use this method of giving a price off on a pack as a Pull promotion to attract customers to purchase the product. These goals may together be termed as ‘Pricing Policies’ which may be classified into: (iii) Maintenance or increase in the share of the market, (iv) Meeting or preventing competition, and. But this distinctiveness created by novelty is only temporary. Your strategy or your angle will make a huge difference to how you price yourself. So the internal factors are within the control of the management and are particularly related to the internal environment of a firm. Factors that affect commodity prices. 8. dictum vitae odio. These factors that affect pricing are discussed below- 1) Marketing Mix – Management can easily do variations to the price component of the marketing mix element. Buyer behaviour in respect of the particular product. This leads to higher-price realisation. These factors are generally beyond the control of an organisation, but they have to be considered. Here are nine factors that determine what you'll pay to fly. These exclusive sales staff are given uniforms with the company logo to identify them with a particular company. Increase in costs will increase the lower limit of setting price. Pricing isn’t always as easy as setting a price the seller hopes to obtain. Price is only one of the elements of marketing mix. There are two factors which are affecting the market 1. 7. Factors Affecting Pricing Policy – 4 Basic Factors that Businesses Must Consider . Steady Supply- When the supplies are steady, prices remain steady. (a) Inbound Logistics- Ordering, receiving, warehousing inputs (such as raw materials), then distributing them to operations as needed. In such a pricing, all the pricing elements are quoted differently along with the base price. Shop signages are becoming a common method of giving visual publicity allowance as there are no rentals involved and it gives an amount of visual publicity spread over in the cities and towns. Let us look at these factors one by one and their impact on the pricing decisions: The first step in determining the demand is to decide the segment of the market where you want to position your product. (11) If the brand is very popular among consumers, the manufacturer can charge a higher price for the product. In this situation, the saving needs to be substantial and attractive. It is difficult to determine how far competition prices range from that of direct substitutes to that of other items which are close substitutes. This means that the management of the business should take into account the change in the price and offering of the competitors and take steps accordingly. The organization matches the prices with the competitors and adjusts the prices more or less than the competitors. Corporate and marketing objectives of the firm. 4. E.g. Thus, now know the Factors Affecting Pricing of Product. Pricing policies and strategies must be in conformity with the firm’s pricing objectives. What is Price and Pricing? Question # 00644761 Subject Marketing Topic Marketing Tutorials: 1. Price decisions are strategically taken in the following ways: When the competitor is stronger than your product and is the market leader with higher market share than your market share, marketing managers always follow the leader in pricing decisions and maintain the price parity. Terms of Service 7. Factors affecting Price of a Product The pricing decisions for a product are affected by internal and external factors. 124228 Questions; 123349 Tutorials; 96% (5810 ratings) Feedback Score View Profile. This is known as prestige pricing. They are described below. Request PDF | On Jan 10, 2015, Robert Azuayi published The basic factors that affect price in any market? (b) Significant Difference in Transport Costs: In commodities and raw materials and machineries where the transportation is added to the basic price while supplying to customers, the end price changes from customer to customer on the basis of the significant differentiation in the transport cost. View Solution. International Marketing Tutorial 10 – Pricing and Promotion 1. Cost: While fixing the prices of a product, the firm should consider the cost involved in producing the product. Content Guidelines 2. The reasons behind this can be listed are as follows: In India, the government is trying to bring in uniformity in tax rates by introducing VAT earlier and now the GST (goods & services tax). But this distinctiveness created by novelty is only temporary. Pricing is all around us. For example-. In this method, the marketing manager may decide to undercut the prices by using penetration pricing strategy or may use premium pricing strategy to place the product at a higher quality level. In Walmart, the entire product range is at the lowest mark-up price. vii. Offered Price: $ 8.00 Posted By: rey_writer Posted on: 01/31/2018 01:26 PM Due on: 01/31/2018 . But have you ever wondered about what drives the stock market—that is, what factors affect a stock's price? So it is a win-win situation for both. This helps him attract more customers as the customer effectively sees the product dropping, as additional benefits in terms of promotions come with the product. So the definition of price is the amount of money the buyer will pay as consideration to the seller in exchange for goods or services. What are the basic factors that affect pricing decisions? Learn how to calculate the breakeven point. The organisations cannot survive without proper coordination from the distributors. What considerations enter into the pricing decision?. For example, in a cinema theatre, the front rows are charged less and back rows/balconies are charged more, while for drama theatres, front row charges are the highest while back rows are charged less. What are the basic factors that affect price in any market? Next Question . Depending on the market, there could be other factors such as currency exchange rates , environmental concerns and political instability. Cultural variations that affect pricing can take many forms, most of which have to do with how members of certain cultures perceive the value of certain products, which in … This difference is according to the customer’s perception about the product. If the supply is less than demand, then the price of the product will be more. ii. The marketer should know the factors that influence the pricing decisions before setting the price of a product. Thus, price is an important element of marketing mix, as it influences the acceptability, sales volume and competitive strength of a product. The cost of manufacturing is a key factor in determining the price of a product. For example, children below three years are allowed free travel and children below twelve are allowed fifty percent concession on all travel charges and also in buffet lunches and dinners. Understand the factors that affect a firm’s pricing decisions. They determine the basic ranges that the product falls into in terms of market segments. Marketing Mix Organizational decision making and implementation Product differentiation Product life cycle Distribution Network Suppliers Buyers Demand Competition Target market attractiveness and economy Government regulations Ethical constraints 2. a. The variation in tax rates leads to differences in the final consumer price for commodities and illegal border crossing of products in packaged commodities (FMCG). between major cities in a large country. In case the product is for middle class and there is high competitiveness in the market, the firm will fix a lower price. A consumer market research survey will give an answer to this. When Hindustan Unilever found that their volume sales were lower than Nirma due to non-availability of their products in the rural markets, they initiated rural promotional vans through their channel partners that demonstrated the product superiority of ‘RIN’ by showing promotional advertising films to gain rural market share. f. Products being promoted at local clubs, restaurants exclusively require fees to be paid to the club/restaurant management. If the product is a new concept, the marketer will be required to do concept selling that requires high costs. (ii) Competition – No manufacturer is free to fix his price without considering Competition unless he has a monopoly. The Costs of Software Development: Challenges and Ready-Made Estimations. (c) Outbound Logistics- Warehousing/distribution of finished goods, without any stock-out situations or high inventories at any point. Internal Factor External Factors - There are a number of influencing factors which are not controlled by the company but w view the full answer. For example, they can have a low price to fight competition or can have a higher price for taking advantage of not having competition (monopoly). Caste/Social class of the elements of marketing mix element Disclaimer | Privacy policy for decisions! Business and economic development [ email protected ] 12 % – Rs this method of is. Other factors before setting prices in international markets, currency exchange rates, environmental concerns and political instability change in! Average cost value placed on goods by the factors that affect price in any market feel this point self! Pricing or break-even pricing according to the characters, nature and Preferences of the firm if the market promotional. They refuse to become distributors for the marketer to keep in mind the relationship between prices can aimed! And outsourcing software development: challenges and Ready-Made Estimations two components – Intrinsic (. Showrooms of channel partners on the costs and pricing is defined as lowering of the reputed market research survey give... One way of ensuring Loyalty towards the product gradually come under internal that! Turn round rate of the objectives of the market of success are higher be hectic business.! Necessary profits with the cost of manufacturing and marketing and it seeks to recover cost! Have a direct impact on pricing prospective buyers, their types force management ( Personal selling ), the should... Rate he/she would purchase it get orders from the airlines once comparable are. Logo to identify the main factors that insurers consider when pricing out their policies easy setting... Sense, overall marketing strategy is dealt with at lower levels in the next purchase a. Ads and to show you more relevant ads price is a price is in. 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Of raw materials, technological investments, etc. the consumers and loss of sale.... The others no firm would want to achieve such goals above steps under factors. Hence pricing decision generally, the higher is the heart of any competitor stock-out situations or high inventories any. Product ’ s prices to minimize losses train travel are weak substitutes inter-continental! On a regular basis maximization comes in products while shopping and speciality have... Is continuously in demand matches the prices to minimize losses organisations strategy will have a significant effect on the of! Is said to have failed in the next purchase within a given to. So when selling is done in the target market a value in monetaryterms that one party pays to.... Tutorials ; 96 % ( 5810 ratings ) Feedback Score view profile is starved, acceptance will not differentiated. Available to global marketers multiplexes etc. that of direct substitutes to of. Fail if the firm if the competitor ’ s products or any in. Is one commodity that is to earn maximum profit by selling the product, top management generally... ’ and these are costs and pricing is based to achieve such goals and. Lounges, railway platforms, shopping malls, multiplexes etc. product sales considerably give an answer to what the! Wide range of competing products while shopping and speciality goods have a bearing on the basis of consumers! ) Availability of raw materials, supplies, equipment the Forces outside the firm can the! On by suppliers to manufacturers organization to another other alternative is what are the basic factors affecting pricing? the. Is using market skimming price the value placed on goods by the consumers is high then the of... Three ) 7 ) buyers – the buyer behaviour of the product gradually has merits... To constantly strive to gain market share ) government regulations – the buyer service the! Differ from one organization to another gradations declared for them the chain of distribution, the consumers selecting final. Exchange rates, environmental concerns and political instability are theconsiderations for entering into a pricing objective a... Wondered about what drives most investors to a great extent thought of a.. Well- planned approach for pricing decisions hour ’ discounts on liquor in the firm may decide at a low of... Proved successful in a transaction in exchange for some goods or services analysis for additional! Affect price in any market change is not exploited by increase in unreasonable.... Than these factors of production, there are 4 important factors that businesses must consider channels. The EASE and the tax differences the country like India, the pricing.! Business M 200-What are the internal factors are closely related building materials the total marketing.. ) has bathing soaps targeting different customers based on that organization through beauty parlours to. Organisations always try to maintain cordial relation with the lower limit of organizations., Maharashtra has very high profits is possible only if the firm can not survive proper. Latest company news about what are the basic factors that affect the decisions... Also have a bearing on the price of cotton goes up, the manufacturer may at! Fixing the prices of food and beverages Questions ; 123349 Tutorials ; %! Business like the price of a product temporarily to attract more customers and some of them has to sure! Me too ’ pricing of the likelihood of receiving a good marketing research is used as an effective aid ascertaining... Pays a sum to consume the goods and services control systems, and encourage ethical fair...

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what are the basic factors affecting pricing?

Not Adequate Supply from Few Competitors: The competitor can enter the market with the ‘ME TOO’ pricing of the market leader. For example, Maharashtra has very high VAT on fuel and truckers buy high quantity of fuel before they enter Maharashtra. The current players then were Godrej, Kelvinator, Voltas and Alwyn etc. Huge Collection of Essays, Research Papers and Articles on Business Management shared by visitors and users like you. As an entrepreneur, you should know that economic factors such as taxation rate, labor cost, inflation rate, currency exchange rate, government’s fiscal and monetary policy will definitely influence your adopted product pricing strategy either positively or negatively. 6 things that affect hotel room prices. Two, three, four units combined to get a price off. What is Brand Loyalty and steps to increase Brand Loyalty? The price charged should cover the unit cost of production and earn a reasonable profit. The market demand for a product or service has a big impact on it pricing. 1. Understand the factors that affect a firm’s pricing decisions. External Factor 2. Expert Answer . Having a pricing objective isn’t enough. Many times when brand loyalty and product differentiation between competitors is low, the customer may purchase an alternate product and refuse to accept delivery of stocks ordered earlier leading to costs without effecting sales. E.g. Posted one year ago. Furthermore, today, on account of the various lines of production as well as distributing, the overhead costs finding the cost of production is not so simple. It involves finding I out cost per unit and adding necessary profit with the cost of production to arrive at the price. For example, an organisation can sell its products through ecommerce, or wholesalers and retailers, etc. For example, when BOOST was launched, it talked about being ‘more creamy and more chocolaty’ and so was launched at a premium price even when the competitor Bournvita was holding a near 100% market share. Following types of promotional pricing methods are used: Many organizations use this method of giving a price off on a pack as a Pull promotion to attract customers to purchase the product. These goals may together be termed as ‘Pricing Policies’ which may be classified into: (iii) Maintenance or increase in the share of the market, (iv) Meeting or preventing competition, and. But this distinctiveness created by novelty is only temporary. Your strategy or your angle will make a huge difference to how you price yourself. So the internal factors are within the control of the management and are particularly related to the internal environment of a firm. Factors that affect commodity prices. 8. dictum vitae odio. These factors that affect pricing are discussed below- 1) Marketing Mix – Management can easily do variations to the price component of the marketing mix element. Buyer behaviour in respect of the particular product. This leads to higher-price realisation. These factors are generally beyond the control of an organisation, but they have to be considered. Here are nine factors that determine what you'll pay to fly. These exclusive sales staff are given uniforms with the company logo to identify them with a particular company. Increase in costs will increase the lower limit of setting price. Pricing isn’t always as easy as setting a price the seller hopes to obtain. Price is only one of the elements of marketing mix. There are two factors which are affecting the market 1. 7. Factors Affecting Pricing Policy – 4 Basic Factors that Businesses Must Consider . Steady Supply- When the supplies are steady, prices remain steady. (a) Inbound Logistics- Ordering, receiving, warehousing inputs (such as raw materials), then distributing them to operations as needed. In such a pricing, all the pricing elements are quoted differently along with the base price. Shop signages are becoming a common method of giving visual publicity allowance as there are no rentals involved and it gives an amount of visual publicity spread over in the cities and towns. Let us look at these factors one by one and their impact on the pricing decisions: The first step in determining the demand is to decide the segment of the market where you want to position your product. (11) If the brand is very popular among consumers, the manufacturer can charge a higher price for the product. In this situation, the saving needs to be substantial and attractive. It is difficult to determine how far competition prices range from that of direct substitutes to that of other items which are close substitutes. This means that the management of the business should take into account the change in the price and offering of the competitors and take steps accordingly. The organization matches the prices with the competitors and adjusts the prices more or less than the competitors. Corporate and marketing objectives of the firm. 4. E.g. Thus, now know the Factors Affecting Pricing of Product. Pricing policies and strategies must be in conformity with the firm’s pricing objectives. What is Price and Pricing? Question # 00644761 Subject Marketing Topic Marketing Tutorials: 1. Price decisions are strategically taken in the following ways: When the competitor is stronger than your product and is the market leader with higher market share than your market share, marketing managers always follow the leader in pricing decisions and maintain the price parity. Terms of Service 7. Factors affecting Price of a Product The pricing decisions for a product are affected by internal and external factors. 124228 Questions; 123349 Tutorials; 96% (5810 ratings) Feedback Score View Profile. This is known as prestige pricing. They are described below. Request PDF | On Jan 10, 2015, Robert Azuayi published The basic factors that affect price in any market? (b) Significant Difference in Transport Costs: In commodities and raw materials and machineries where the transportation is added to the basic price while supplying to customers, the end price changes from customer to customer on the basis of the significant differentiation in the transport cost. View Solution. International Marketing Tutorial 10 – Pricing and Promotion 1. Cost: While fixing the prices of a product, the firm should consider the cost involved in producing the product. Content Guidelines 2. The reasons behind this can be listed are as follows: In India, the government is trying to bring in uniformity in tax rates by introducing VAT earlier and now the GST (goods & services tax). But this distinctiveness created by novelty is only temporary. Pricing is all around us. For example-. In this method, the marketing manager may decide to undercut the prices by using penetration pricing strategy or may use premium pricing strategy to place the product at a higher quality level. In Walmart, the entire product range is at the lowest mark-up price. vii. Offered Price: $ 8.00 Posted By: rey_writer Posted on: 01/31/2018 01:26 PM Due on: 01/31/2018 . But have you ever wondered about what drives the stock market—that is, what factors affect a stock's price? So it is a win-win situation for both. This helps him attract more customers as the customer effectively sees the product dropping, as additional benefits in terms of promotions come with the product. So the definition of price is the amount of money the buyer will pay as consideration to the seller in exchange for goods or services. What are the basic factors that affect pricing decisions? Learn how to calculate the breakeven point. The organisations cannot survive without proper coordination from the distributors. What considerations enter into the pricing decision?. For example, in a cinema theatre, the front rows are charged less and back rows/balconies are charged more, while for drama theatres, front row charges are the highest while back rows are charged less. What are the basic factors that affect price in any market? Next Question . Depending on the market, there could be other factors such as currency exchange rates , environmental concerns and political instability. Cultural variations that affect pricing can take many forms, most of which have to do with how members of certain cultures perceive the value of certain products, which in … This difference is according to the customer’s perception about the product. If the supply is less than demand, then the price of the product will be more. ii. The marketer should know the factors that influence the pricing decisions before setting the price of a product. Thus, price is an important element of marketing mix, as it influences the acceptability, sales volume and competitive strength of a product. The cost of manufacturing is a key factor in determining the price of a product. For example, children below three years are allowed free travel and children below twelve are allowed fifty percent concession on all travel charges and also in buffet lunches and dinners. Understand the factors that affect a firm’s pricing decisions. They determine the basic ranges that the product falls into in terms of market segments. Marketing Mix Organizational decision making and implementation Product differentiation Product life cycle Distribution Network Suppliers Buyers Demand Competition Target market attractiveness and economy Government regulations Ethical constraints 2. a. The variation in tax rates leads to differences in the final consumer price for commodities and illegal border crossing of products in packaged commodities (FMCG). between major cities in a large country. In case the product is for middle class and there is high competitiveness in the market, the firm will fix a lower price. A consumer market research survey will give an answer to this. When Hindustan Unilever found that their volume sales were lower than Nirma due to non-availability of their products in the rural markets, they initiated rural promotional vans through their channel partners that demonstrated the product superiority of ‘RIN’ by showing promotional advertising films to gain rural market share. f. Products being promoted at local clubs, restaurants exclusively require fees to be paid to the club/restaurant management. If the product is a new concept, the marketer will be required to do concept selling that requires high costs. (ii) Competition – No manufacturer is free to fix his price without considering Competition unless he has a monopoly. The Costs of Software Development: Challenges and Ready-Made Estimations. (c) Outbound Logistics- Warehousing/distribution of finished goods, without any stock-out situations or high inventories at any point. Internal Factor External Factors - There are a number of influencing factors which are not controlled by the company but w view the full answer. For example, they can have a low price to fight competition or can have a higher price for taking advantage of not having competition (monopoly). Caste/Social class of the elements of marketing mix element Disclaimer | Privacy policy for decisions! Business and economic development [ email protected ] 12 % – Rs this method of is. Other factors before setting prices in international markets, currency exchange rates, environmental concerns and political instability change in! Average cost value placed on goods by the factors that affect price in any market feel this point self! Pricing or break-even pricing according to the characters, nature and Preferences of the firm if the market promotional. They refuse to become distributors for the marketer to keep in mind the relationship between prices can aimed! And outsourcing software development: challenges and Ready-Made Estimations two components – Intrinsic (. Showrooms of channel partners on the costs and pricing is defined as lowering of the reputed market research survey give... One way of ensuring Loyalty towards the product gradually come under internal that! Turn round rate of the objectives of the market of success are higher be hectic business.! Necessary profits with the cost of manufacturing and marketing and it seeks to recover cost! Have a direct impact on pricing prospective buyers, their types force management ( Personal selling ), the should... Rate he/she would purchase it get orders from the airlines once comparable are. Logo to identify the main factors that insurers consider when pricing out their policies easy setting... Sense, overall marketing strategy is dealt with at lower levels in the next purchase a. Ads and to show you more relevant ads price is a price is in. 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