After determining its pricing objectives, what is the next logical step a company should take in setting its pricing policy ?
Determine the demand of the product
Option 2 — Determine the demand of the product is correct.
Kotler lays out a six-step procedure for setting a price. After a firm decides WHY it is pricing (its objective — survival, maximum current profit, market-share leadership, etc.), the next logical step is to gauge how much customers are willing to buy, because demand sets the ceiling on price.
| Step | Activity |
|---|---|
| 1 | Selecting the pricing objective |
| 2 | Determining demand |
| 3 | Estimating costs |
| 4 | Analysing competitors' costs, prices and offers |
| 5 | Selecting a pricing method |
| 6 | Selecting the final price |
Demand and costs bracket the price: demand fixes the upper limit (what buyers will pay) and cost fixes the floor. Estimating costs (step 3), studying competitors (step 4) and choosing a method (step 5) all come later.
Takeaway: In Kotler's pricing sequence, demand determination immediately follows the setting of pricing objectives.
Similar Questions
Find the most appropriate sequence of life-cycle of price for a product, from the initial stage to the mature stage.
The practice of selling below cost, with an intention to destroying the competitor is referred to as :
Select the correct sequence of steps in setting a pricing policy:
(a) Determining Demand
(b) Analysing competitors' costs, prices and offers
(c) Selecting the Final Price
(d) Selecting the Pricing Objective
(e) Estimating costs
(f) Selecting a pricing method
Codes:
A company prices a 2 litre bottle of its mineral water at ₹ 30 but 60 ml of the same water in a moisturizer spray for ₹ 75. This is an example of which one of the following pricing practices?
Cost - Plus pricing is not suitable for :
Match the items of List - I with that of List - II and suggest the correct code :
List - I (Pricing Strategies) List - II (Explanations) (a) Customary pricing (i) Ending a price with 99 paise (b) Skimming (ii) pricing a product based on perceived expectations of customers (c) Penetration pricing (iii) Setting a high price which gradually reduces as competitors enter the market (d) Psychological pricing (iv) Offering at a low price for a new product during its initial offering Code :
Find the most appropriate sequence of life-cycle of price for a product, from the initial stage to the mature stage.
The practice of selling below cost, with an intention to destroying the competitor is referred to as:
After determining its pricing objectives, what is the next logical step a company should take in setting its pricing policy?
When the Companies pay less attention to its own costs or demands and bases its price largely on competitors’ prices, then it is known as :
Important Questions from Pricing decisions
Pricing practice of setting a price target and then developing a product that would allow the firm to maximise total profit at that price is called:
In which of the following price adjustment strategies. a company reduces prices to reward customer responses such as volume purchases, paying early or promoting the product?
The consumer's price sensitivity is / are influenced by
A. Who bears the cost
B. What percentage of total expenditure does the product represent
C. Who bears the cost and type of retailer from where customer purchases
D. Consumption of product by the customer
E. Knowledge about the product
Choose the most appropriate answer from the options given below:
- Which of the following are the informal pricing methods ?
I. Cost plus
II. Competitive
III. Rate of return
IV. Trial and error
Codes : Which among the following is not an internal factor in pricing decisions?
