Revel flashcards: Chapter 7.3 Internal influences on pricing decisions.

Question 1

3 internal influences on pricing decision:

Answer 1

• Organisational objectives
• Marketing objectives
• Costs

Question 2

Organisational objectives (an internal influence on pricing decision):

Answer 2

• Area is linked with corporate strategy.
• Marketing plans not only need to be set to satisfy customer needs but also need to align with aspiriations of the organisation.

Position in the market:
- Corporate strategy is concerned with an organisations relative position in comparison to competition.
- Price may be used as a signal a desire for leadership or to establish a differentiated niche. e.g. ALdi take a price leadership in the market

Changing objectives:
- Relative to where the firm is in the market, survival and growth may take different pricing strategies.

Question 3

Examples of organisational objectives:

Answer 3

• Target volume sales
• Target value sales
• Target growth in various market segments
• Target profit figures.

Question 4

Marketing objectives (an internal influence on pricing decision):

Answer 4

• MO are more closely focused on specific target markets and the position desired within them.
• MO are achieved by using the whole integrated marketing mix, as an organisation may have a large product portfolio which will subsequently need different pricing decisions.
• Key is to use other elements of the marketing mix to support the price or provide a rationale for it

Product lifecycle can also affect pricing:
- Intro- low price usually
- Growth - may increase price due to more demand and loyal customers.
- Maturity/ decline - may decrease the price

Question 5

Costs (an internal influence on pricing decision):

Answer 5

• Joint or shared costs are divided between a number of products produced by one organisation.
• Cost to make product ultimately affects what price is set.