Discuss the significance of pricing.
Pricing the products and services is an important task of marketers, pricing depends on various factors in external and internal environment of business. Marketing manager should have sufficient knowledge of market variables and skills to fix suitable price of products and services.
Adopting the right pricing strategy helps a company achieve its objectives. However, ineffective pricing causes significant damage to the company’s growth and image. Thus, pricing is very important to a marketer to sustain in the competitive market. Sales target set by company are based on price of product, pricing is the biggest challenge that a company face.
Today’s customer is well aware about prices of competitive products, therefore prices should be competitive. Other business factors like taxation, export import policy and technological changes can impact prices of products. The sales of a product have an impact on the pricing mechanism. However, sales of a product can increase because it has been priced too low and not because it has been priced right. Setting the right price can have an extensive impact on the profits of the firm.
Pricing is a very important aspect of the firm’s survival, firm’s expansion and diversification programmes depends on revenue earned and it is decided by sales. Firms must develop proper pricing strategies and convert them into effective competitive advantages. Firms future prospects depends on estimation of sales and profit as pricing strategies and corporate strategies are interrelated, wrong pricing policies can have negative impact on future planning of an organization.
Pricing policy is a strong tool to gain competitive advantage in the market. Setting the prices of products should be a coordinated among the various departments of an organization it is a joint task of production and marketing department. Therefore we can conclude pricing is an important decision related to the profitability and to fulfill objectives of an organization.
