Question

What is pricing? List the objective of pricing and when setting prices, the company must consider its external environment. Describe four parts of the external environment and how they affect businesses.

Answer 1

Pricing means determining price of a product which the businessman will sell in the market.

Objectives of pricing are-

1. Earn profit: Setting the price that much which will bring profit to a businessman

2. Setting price equal to the buyers willingness to pay for product.

3. The objective of pricing is to meet or prevent competition.

4. Price cosistency so that it become reliable and supports customers confidence and customer satisfaction.

The four parts of the external environment are

Customers: A customer can influnce business through marketing and srrategic release of corporate information

Government: Fiscal policies of government like regulation policies related to product, development, packaging, and shipping play an very curicial role in the expenses of doing business. It also can affect the ability to expand .

Compition: In a business other competitor always affect its decision making behavior. What pricing strategies a company will adopt, the quality of the product, the design of the product etc are influnced by the other competitors.

Economy: Economic factors affect how a product will be marketed, the cost of the firm, the nature of target markets the company will pursue.