Part I
a.
b.
c.
d.
Identify types of pricing objectives.
Explain reasons for setting pricing objectives.
Describe ways in which pricing objectives
are used.
Demonstrate procedures for establishing
pricingobjectives.
Pricing objectives:
1. Survival
 Prices are flexible. A company can lower
them in order to increase sales enough
to keep the business going. The
company uses a survival-based price
objective when it's willing to accept
short-term losses for the sake of longterm viability.

Pricing objectives:
2. Profit
 Price has both direct and indirect effects on
profit. The direct effect relates to whether
the price covers the cost of producing the
product. Price affects profit indirectly by
influencing how many units sell. The
number of products sold also influences
profit through economies of scale -- the
relative benefit of selling more units. The
primary profit-based objective of pricing is
to maximize price for long-term profitability.

Pricing objectives:
3. Sales
 Sales-oriented pricing objectives seek to
boost volume or market share. A volume
increase is measured against a company's
own sales across specific time periods. A
company's market share measures its
sales against the sales of other companies
in the industry. Volume and market share
are independent of each other, as a
change in one doesn't necessarily spur a
change in the other.

Pricing objectives:
4. Status Quo
 A status quo price objective is a tactical
goal that encourages competition on
factors other than price. It focuses on
maintaining market share, for example,
but not increasing it, or matching a
competitor's price rather than beating it.
Status quo pricing can have a stabilizing
effect on demand for a company's
products.

What is a pricing objective?

A goal that guides a business in setting the cost
of a product or service to potential consumers.
A pricing objective underlies the pricing process
for a product, and it should reflect a company's
marketing, financial, strategic and product
goals, as well as consumer price expectations
and the levels of available stock and production
resources.
6 Steps to Setting a Price
Strategy for your Business
1.
2.
3.
4.
5.
6.
Select the pricing objective to decide where
you want to position your market offering.
Determine the demand.
Estimate the costs.
Analyze competitor costs, prices, offers and
possible reactions.
Select a pricing method.
Finally, select the price