What Are What are the Major Factors To Consider before a decision on pricing is made.?

Pricing which is part of the overall marketing strategy plays a very critical role in the success of a company as it is able to increase the profitability and or increase the market share.

Normally, the higher the prices means higher profit being attained but might means lower market share.

Pricing ties very closely with the various stages of a product life cycle.

Before a decision on the pricing is made, certain factors need to be consider:

  • What are the objectives of the company to maximize profit ?, to gain market share?, to penetrate the new market and others;
  • What is the existing economic conditions;
  • Any government regulations;
  • Cost structure of the organization;
  • Demand for the product which should includes a study of the price elasticity of demand;
  • Inflation;
  • Surplus production capacity
  • Level of competition and
  • Political scenario

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