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What are the objectives of a firm’s pricing strategy?

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barbiedot | Student, Undergraduate | (Level 1) Valedictorian

Posted June 28, 2012 at 3:45 PM via web

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What are the objectives of a firm’s pricing strategy?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted June 28, 2012 at 4:05 PM (Answer #1)

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Different firms can have different objectives in their pricing strategies. The most common of these strategies are:

  • Competitive pricing.  In this strategy, companies set prices that are similar to those of their competitors and try to compete on some other basis (quality, convenience, etc) rather than on price.
  • Prestige pricing.  In this strategy, companies set their prices high so they can create a high-class, exclusive image for themselves.
  • Profitability pricing.  Here, the firm sets prices higher than in competitive pricing.  It does so to try to maximize profits.  It must therefore not set the price too high.
  • Volume pricing.  This is a low price strategy.  The firm sets prices low to try to win market share.

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