DEVELOPINGA PRICINGSTRATEGY 2 31
MARKETING CAPSULE9.
1 ,Priceshouldbeviewedfromthreeperspectives:
a.Thecustomer
b. Themarketer
c. Society
2.Pricingobjectives:
a. Survival
b.Profit
c. Sales
d. Marketshare
e.Image
torsashelpingorganizationsto:(1)survive,(2)earna profit,(3)generatesales,(4)secure
anadequateshareofthemarket,and(5)gainanappropriateimage.
- Survival:It is apparentthatmostmanagerswishtopursuestrategiesthatenable
theirorganizationstocontinueinoperationforthelongterm.Sosurvivalisone
majorobjectivepursuedbymostexecutives.Fora commercialfirm,thepricepaid
bythebuyergeneratesthefirn1'srevenue. If revenuefallsbelowcostfora long
periodoftime,thefirmcannotsurvive.
- Profit:Survivaliscloselylinkedtoprofitability.Makinga $500,000profitdur-
ingthenextyearmightbea pricingobjectivefora firm. Anythinglesswillensure
failure.Allbusinessenterprisesmustearna long-termprofit.Formanybusinesses,
long-termprofitabilityalsoallowsthebusinesstosatisfytheirmostimportant
constituents-stockholders.Lower-than-expectedornoprofitswilldrivedownstock
pricesandmayprovedisastrousforthecompany.
- Sales:Justassurvivalrequiresa long-termprofitfora businessenterprise,profit
requiressales.Asyouwillrecallfromearlierinthetext,thetaskofmarketing
managementrelatestomanagingdemand.Demandmustbemanagedinorderto
regulateexchangesorsales.Thusmarketingmanagement'saimistoaltersales
patternsinsomedesirableway.
- MarketShare:If thesalesofSafewaySupermarketsintheDallas-FortWorthmet-
ropolitanareaaccountfor30%ofallfoodsalesinthatarea,wesaythatSafeway
hasa 30%marketshare.Managementofallfirms,largeandsmall,areconcerned
withmaintaininganadequateshareofthemarketsothattheirsalesvolumewill
enablethefirmtosurviveandprosper.Again,pricingstrategyisoneofthetools
thatissignificantincreatingandsustainingmarketshare.Pricesmustbesetto
attracttheappropriatemarketsegmentinsignificantnumbers.
- Image:Pricepoliciesplayanimportantroleinaffectinga firm'spositionofrespect
andesteeminitscommunity.Priceis a highlyvisiblecommunicator.It mustcon-
veythemessagetothecommunitythatthefirmoffersgoodvalue,thatit is fair
initsdealingswiththepublic,thatitisa reliableplacetopatronize,andthatit
standsbehinditsproductsandservices.
Developinga PricingStrategy
Whilepricinga productorservicemayseemtobea simpleprocess,it isnot.Asanillus-
trationofthetypicalpricingprocess,considerthefollowingquote:"Pricingisguesswork.
Itisusuallyassumedthatmarketersusescientificmethodstodeterminethepriceoftheir
