In general prices should not be based on costs because
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consumers make purchase decisions based on their perceived value
praneethkumargoud:
hi vanshika
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One of the four major elements of the marketing mix is price. Pricing is an important strategic issue because it is related to product positioning. Furthermore, pricing affects other marketing mix elements such as product features, channel decisions, and promotion.
While there is no single recipe to determine pricing, the following is a general sequence of steps that might be followed for developing the pricing of a new product:
Develop marketing strategy - perform marketing analysis, segmentation, targeting, and positioning.
Make marketing mix decisions - define the product, distribution, and promotional tactics.
Estimate the demand curve - understand how quantity demanded varies with price.
Calculate cost - include fixed and variable costs associated with the product.
Understand environmental factors - evaluate likely competitor actions, understand legal constraints, etc.
Set pricing objectives - for example, profit maximization, revenue maximization, or price stabilization (status quo).
Determine pricing - using information collected in the above steps, select a pricing method, develop the pricing structure, and define discounts.
While there is no single recipe to determine pricing, the following is a general sequence of steps that might be followed for developing the pricing of a new product:
Develop marketing strategy - perform marketing analysis, segmentation, targeting, and positioning.
Make marketing mix decisions - define the product, distribution, and promotional tactics.
Estimate the demand curve - understand how quantity demanded varies with price.
Calculate cost - include fixed and variable costs associated with the product.
Understand environmental factors - evaluate likely competitor actions, understand legal constraints, etc.
Set pricing objectives - for example, profit maximization, revenue maximization, or price stabilization (status quo).
Determine pricing - using information collected in the above steps, select a pricing method, develop the pricing structure, and define discounts.
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