Steps in Setting Price:
Following are the steps in setting price for a product:
1. Selecting the pricing objectives;
2. Determining the consumers' demand;
3. estimating costs;
4. Analysing the competitors' costs, prices and offers;
5. Selecting a pricing method; and
6. Selecting the final price.
1. Selecting the pricing objectives: Before selecting a suitable price for a product, the marketer is needed to review the company's objectives. The more clearer the company's objectives, the more easier to set a price. Following are the possible pricing objectives:
b) maximum current profit,
c) maximum market share,
d) maximum market skimming, and
e) product quality leadership.
The decision whether to select high price or low price depends on various factors:
(i) Price susceptibility of market,
(ii) Number of competitors in the market, and
(iii) Production cost per unit.
The price level also depends on the type of marketing strategy adopted for the product.
The possible marketing strategies are listed below:
(a) Rapid Skimming: It refers to launching a new product at a high level of price with high level of sales promotion. It refers to the product which is of high quality, but not known to the buyers. As soon as the product is known to the buyers, the buyers are willing to purchase them even at a higher price. It may also refer to the market where there are strong potential competitors.
(b) Slow Skimming: It refers to launching a new product at a high price with low level of promotion. It also refers to the situation where the company's brand is known to the buyers and they are willing to purchase them even at a higher price. It may also refer to the market where there are few competitors.
(c) Rapid Penetration: It refers to launching a new product at a low price with high level of promotion. This marketing strategy is adopted where the company's brand is unknown in the market and where there are strong