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:
(d), (a), (e), (b), (f) and (c)
Concept: Kotler lays out a logical six-step price-setting procedure, moving from the firm's goal, through market and cost information, to the method and finally the price itself.
The sequence follows the reasoning a firm would use. A firm first decides what it wants the price to achieve - selecting the pricing objective (d). It then determines demand (a) at different prices, estimates its costs (e) as the floor, and analyses competitors' costs, prices and offers (b) for reference. With this information it selects a pricing method (f) and finally selects the final price (c). So the order runs d, a, e, b, f, c - objective, demand, costs, competitors, method, final price.
Example: A firm aiming to maximise market share (objective) studies how much buyers will take at each price (demand), checks its own costs as a floor and rivals' prices as a benchmark, picks a method, then sets the exact figure.
Option check: The objective (d) must come first, so option 4's plain a-to-f order is wrong; and demand and costs must be known before analysing competitors and choosing a method, which rules out options 2 and 3 that shuffle e and b. Only (d), (a), (e), (b), (f), (c) preserves the logic.
Hence the correct sequence is (d), (a), (e), (b), (f) and (c).
Similar Questions
Find the most appropriate sequence of life-cycle of price for a product, from the initial stage to the mature stage.
After determining its pricing objectives, what is the next logical step a company should take in setting its pricing policy ?
The practice of selling below cost, with an intention to destroying the competitor is referred to as :
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 :
Match the items of the List-I with those of the List-II and suggest the correct code from the following:
List-I List-II i. Loss Leader a. Locational price differentials ii. Unchanged Pricing b. Products with high initial demands iii. Basing Point Pricing c. Product line pricing iv. Skimming Pricing d. Oligopoly pricing Codes:
Important Questions from Pricing decisions
- 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?
Find the most appropriate sequence of life-cycle of price for a product, from the initial stage to the mature stage.
After determining its pricing objectives, what is the next logical step a company should take in setting its pricing policy ?
The practice of selling below cost, with an intention to destroying the competitor is referred to as :
