Determining a price is a flexible activities. It means you can modify it in tune with market alteration, especially if you deal with a tight competition. Therefore, you can focus on sales volume (with less price and less profit) rather than focus on profit, and vice versa.
Pricing orientation
- Profit oriented
Profit oriented can be considered to earning maximization.
The pricing objective that has been set must be correlate with the company's action or company's policy.
So, if you have set your goal and focus on profit, you have to ignore competitor's price. And start to market your product and try to disregard price sensitive people.
Nowadays, new competitors emerge. The competition become very tight. Many companies is willing to decrease the price. As a consequence, the profit is lesser than before. They do it because they want to appeal as many customers as possible.
There are two types of profit that are commonly known, they are:
- Margin target
Margin target is desired profit on each sale. - ROI target
ROI target is ratio of total profit against total investment. - Volume oriented
A company that focus on volume usually name it with volume pricing objectives.
Volume pricing objective: price is set in order to reach a certain number of selling volume (sales).
- Image oriented
As you have already known, brand image can be built from proper pricing strategy.
You can determine a high price to maintain prestigious image. Otherwise, you can set a low price to deliver image to customer that your price is the least price in your industry.
The conclusion is whether you set high price or low price, you try to build your image and enhance customer's perspective toward your product or service.
- Price stabilization oriented
If your market contains price sensitive people, you should consider this objective.
This objective is set to maintain stable relationship between you, your industry, and your market.
