Pricing Objectives

Question	Answer
Survival	When the organisation is in a position of sink or swim. Prices are reduced often to levels below cost to maintain sufficient flow of cash
ROI	Significant level of return
Market Stabilisation	Reduce leader retaliation
Maintenance and improvement of market position	Defending current position and gradually increasing market share
Meeting or following competitors	Entering companies into a market might take its lead in pricing from others until it is further established
Pricing to reflect product differentiation	Pricing to create different perceptions of the products value and indirectly increase profits
Market Skimming	Entering the market with a high price and gradually lowering
Market Penetration	Adopting a far more aggressive approach in which prices are set deliberately low to ensure a high level of sales
Early cash recovery	High cash flow leading to an early recovery of cash
Discouraging others from entering the market	Deliberately setting a low price so that returns are low which simultaneously sends out signals about a willingness to engage in a price war with any new entrants

Resource summary

	Created by james.bowditch over 12 years ago