What are the pricing targets?

Pricing objectives are goals that a company hopes to achieve when deciding on the cost of its products or services.

Pricing objectives are goals that a company hopes to achieve when deciding on the cost of its products or services. To be effective, the pricing process must be connected to the overall marketing mix. A marketing mix is ​​known as the 4 Ps: product, price, location/distribution and promotion. All decisions made about price points, or costs of goods or services to buyers, must fit into the marketing strategy or plan that relates to the value of the product – as well as distribution and promotion expenses. The company needs to make a profit, or a profitable return on investment (ROI), to stay in business, but its pricing objectives must also be competitive to attract customers.

One type of pricing objective is to create a “buzz” about a business by making news. For example, a new bread company might base a marketing campaign around the concept of providing quality grains at low prices to help people during an economic downturn. Since the marketing angle and pricing objectives would be different from the competition, it results in a positioning that can attract the attention of the target market through what is known as a unique selling proposition (USP). USPs are strong, persuasive marketing messages that attract large numbers of new customers, giving them a hard-to-resist reason to buy that specific brand over competitors’ offerings.

Other more common pricing objectives involve matching techniques. For example, a company’s pricing strategy and marketing communications message to potential customers might be “We will match all competitors’ prices.” Many companies that use this type of price range strategy add a tagline message such as “You get real value from Smith’s Flooring.” Price matching objectives should be based on a strong knowledge of competitors’ prices as well as cost and overhead for the business to ensure a good ROI is still achieved.

See also  What is Critical Chain Project Management?

“Survival price” is an objective used when a business is not doing well. In this situation, ROI is not considered in the pricing process; instead, the main objective is just to make the business survive. Survival pricing can never be used as a permanent marketing mix strategy, but only as a temporary means of staying in business.

“Skimming” is one of the pricing objectives that can be used when a company targets customers who are not highly motivated by the cost of a product or service. Luxury items are often valued this way; if the product is “the cream of the crop”, it is considered to be worth it at almost any price, as evidenced by its demand. This type of pricing objective takes the cream, or higher value, out of the market by providing premium, highly sought-after products to a unique target audience.

Leave a Comment