Setting Company Pricing Strategies
The role of pricing management in a company's operations
Considered to be one of the key activities within the free enterprise system is pricing. In every managerial task, price management should be given focus because it influences wages, profits, rent, interest, and the over-all movement of a business. Price has a very big impact on our economic system that it is indispensable factor when talking about our economic system.
In today’s world, there is an ever increasing rate of interest, bloating price of consumer goods and services, and increasing volatility of the over-all market. Price has a major influence on these that it can, in a way, alter the course of a country’s economic growth, or drive it into experiencing an economic bust. This is how important pricing is, and price management is the solution to everyone’s pricing problems.
Lots of problems have arisen from the different business systems that are used by companies. Some of these are criticized many consumers because of obsoleteness and ineffectiveness which result to abnormal price growth. The bloating of consumer prices and goods gives a negative impact on the whole economic system and a negative perception as well by the consumers on the over-all consumer market. This has resulted to some calls by the public to put restraint on these business systems or scrap them for good.
The price management system used by a business company should be improved always to keep up with the fast development of business technology in the business world. A company’s management should have a goal in mind for every marketing task which includes pricing. In objective should be conceptualize before determining the actual price itself of the goods and services being provided to the consumers and buyers.
For this will affect a company’s growth in the future and the over-all economy in general. For example, if the company’s objective is to have a rapid increase of their over-all income by the end of a fiscal year, then the management should formulate marketing strategies to reach hit this objective, and one big factor that should be considered is the price of the services or goods that it is selling or marketing. Objective first, and then price determination comes after.
Going with the above example, the company should focus with having profit-oriented strategies if it wants to hit its objective of hitting its company objective – which is to have a rapid increase of company income. The marketing strategies should be compatible with the company objective so as to have a smooth realization of increasing its return of investment or corporate income.
The burden of hitting the company objective is placed on the shoulders of the management. As such it should know beforehand the effects of tasks that it is going to accomplish on the company’s course of business. As effective pricing is one of their primary marketing strategies, it should take into consideration all factors that will make an effective price for the company’s good and services - a price which is proportionate to the value that the company’s product is providing.
When these marketing strategies are conceptualized and put into effect, then what the company is going to do now is leverage on the capacity of these strategies in maximizing the corporate profits, which would ultimate lead to the achievement of the company objective.
Price has a very big impact on a business and the economy of a country in general. On a corporate level, it has been explained with the abovementioned example. A company should have a good price management system so as to benefit from what price has to offer in terms of profit maximization, higher return of investments, and increasing sales volumes of goods and services.