Elaboration of the company's pricing policy
In order to develop its own effective pricing policy, the manufacturer must take into account a number of factors: the type of market, its volume, structure, degree of saturation; determine the elasticity of demand (the rate of change).
First of all, determines the purpose of the price policy.
Then the client's capabilities are evaluated. It is necessary to take into account that the markets for consumer goods and services are interrelated, since they rely on the income of the population and are formed within the available effective demand. With the increase in demand in one of the market sectors, demand in another will decrease. The rise in prices in the national economy as a whole, the fall in real incomes of the population lead to a decrease in the solvency of consumers. Inflation can stimulate changes in the structure of demand, leading to the fact that demand switches to essential goods. But the differentiation of incomes, which is inevitable in the transition to the market, can become an incentive to increase the demand for very expensive and high-quality goods and services.
The next stage of the price formation is the cost estimation, characterizing the firm's capabilities, its competitiveness.
Next, you need to choose the pricing method. One of the known in the world practice is the method of average costs plus profit - charging a certain mark-up on the cost of the product. The size of the surcharge depends on the type of product and is able to fluctuate within a fairly wide range. The method does not provide an opportunity to establish an optimal price for products, since it does not allow to take into account current demand, competition. Therefore, it is usually used by companies in the same industry with similar prices, and therefore, "seriously" not entering into a competitive struggle. It is advisable to apply the method if the producer does not have full information about the demand, but is well aware of the costs. The method is more fair to consumers, because even with increased demand the producer does not cash out at their expense.
When calculating the price on the basis of the break-even principle , the cost of production, marketing costs is taken as a basis, and the desired profit is added to them. This method involves considering different price options, since they affect the sales volume.
If a higher desired profit is pawned, it is necessary to take into account the factors limiting it that lie on the buyers side:
• the overall dynamics of real incomes of the population by social and age groups and the region as a whole;
• the general dynamics of prices for consumer goods and services;
• Changing the structure of consumer demand;
• the possibility of switching due to inflation of consumer demand to meet only the most urgent needs;
• the degree of urgency of needs in these or other kinds of demand and their place among other consumer preferences.
To use this method, constant changes in the contractual and free prices of suppliers for materials and equipment, the creation of a flexible adaptation mechanism that is capable of responding quickly to unstable economic conditions are needed. Only if these conditions are fulfilled, the manufacturer "will fit in" in the allowable level of costs.
In the company "RoKolor", producing cheap hair dye, the competitors in the lower price sector of the market (factory "Liberty", the German firm "Londa", Bulgarian and Polish producers) identified competitors and set the task to keep prices slightly below competitive at the same quality of the product. And to achieve this steel by reducing the cost, achieving this mainly by constantly updating the database of suppliers.
The result was a palliative of cost and market pricing methods. It was reinforced with a new uniform design of the appearance of the commodity line. Approximately 70% of enterprises adhere to this methodology, according to some estimates. This is considered a typical price policy in a normal competitive environment in markets with large consumer capacity. At the same time, it is important to understand that the impact on suppliers with the requirement to reduce prices is the last reserve of costly pricing, and where this reserve is small or nonexistent, companies are forced to move more quickly to market pricing itself.
When you offer an exclusive product or service, you usually resort to the method of determining the price based on the value of the goods perceived by the buyer. This can be about individual tailoring of clothes by author's sketches, order fulfillment in shorter terms, etc. .
Also We Can Offer!
- Argumentative essay
- Best college essays
- Buy custom essays online
- Buy essay online
- Cheap essay
- Cheap essay writing service
- Cheap writing service
- College essay
- College essay introduction
- College essay writing service
- Compare and contrast essay
- Custom essay
- Custom essay writing service
- Custom essays writing services
- Death penalty essay
- Do my essay
- Essay about love
- Essay about yourself
- Essay help
- Essay writing help
- Essay writing service reviews
- Essays online
- Fast food essay
- George orwell essays
- Human rights essay
- Narrative essay
- Pay to write essay
- Personal essay for college
- Personal narrative essay
- Persuasive writing
- Write my essay
- Write my essay for me cheap
- Writing a scholarship essay