Marketing Pricing Objectives

Pricing objectives are goals that describe what a firm wants to achieve through pricing. Pricing objectives must be stated explicitly, and the statement should include the time frame for accomplishing them. There are six stages of setting prices. They are developing pricing objective, assessing the target market's evaluation of price, evaluating competitors' prices, choosing a basis for pricing, selecting a pricing strategy, and determining a specific price.

Cost-based pricing is adding a dollar amount or percentage to the cost of the product. Cost-plus pricing is adding a specified dollar amount or percentage to the seller's cost. Markup pricing is adding to the cost of the product a predetermined percentage of that cost. Demand-based pricing if pricing based on the level of demand for the product. Competition-based pricing is pricing influenced primarily by competitors' prices.

A pricing strategy is an approach of a course or action designed to achieve pricing and marketing objectives. Differential pricing is charging different prices to different buyers for the same quality and quantity of product. Negotiated pricing is establishing a final price through bargaining. Secondary-market pricing is setting one price for the primary target market and a different price for another market. Periodic discounting is temporary reduction of prices on a patterned or systematic basis. Random discounting is temporary reduction of prices on an unsystematic basis. Price skimming is charging the highest possible price that buyers who most desire the product will pay. Penetration pricing is setting prices below those of competing brands to penetrate a market and gain a significant market share quickly.

Product-line pricing is establishing and adjusting prices of multiple products within a product line. Captive pricing is pricing the basic product in a product line low while pricing related items at a higher level. Premium pricing is pricing the highest-quality or most versatile products higher than other models in the product line. Bait pricing is pricing an item in the product line low with the intention of selling a higher-priced item in the line. Price lining is setting a limited number of prices for selected groups or lines of merchandise.

Psychological pricing is pricing that attempts to influence a customer's perception of price to make a product's price