DEFINITION OF PRICE
It is the monetary value which the seller is willing to exchange item, price of a product is what the buyer gives in return. Price may also be defined as the money the sellers receive in exchange of the item while the buyer gives money in exchange of item.
IMPORTANCE OF PRICE
In marketing in Nigeria , the four authors, here from micro-economic standpoint. Price play an a locative role, the general scenario in which this happens is one which goods is generally scarce is in relation to the need for them. In relation to this, the role of price is to allocate them among the demands. The ability and willingness of the people to the reigning price determines the quantity they get. Apart from the above factors there are other factors that plays important role, in the price of a product determines the quantity that will be sold, if and the price also affect profit and loss of a product because high price of item scares buyers; as many may be willing to buy but because of the high cost it will have low patronage and their by affecting the profits as the goods will stay longer than required. Item with low price gains high patronage, as lower the price the more the quantity demands is high. In some areas there are goods that are prestigious.
DETERMINANTS OF PRICE
The Cost the Product: Every company desires to recover its cost and also makes profits; this means that the price in which company sells its product must exceed production cost. For a manufacturer, all the cost incurred both fixed and variable cost, the selling price must exceed them as well as middlemen who buy for resale; set the selling price above the cost of procuring, so the cost of product is an important factor of pricing.
Ability and Willingness of Customers to Pay: The willingness of the customer to buy is an important factor of a seller to know how to the set price and the purchasing power of the customer cannot be ignored by the seller. The ability and willingness to buy is describes as demand for the product.
Competition: Competition has great impact in price, mostly in firms dealing with the same brand. As the competitors arises so as price fall. If firms fall to adjust on their price they may loose the market to the competitors because as supply increases price falls.
Government Legislation: It is hard seeing an economy, government is not interest in the regulation in prices at which product are bought and sold. In some developing countries, price regulatory agencies is so common, the regulatory agencies may imposes maximum price or require approval to invite price while in some undeveloped countries; the price committee have to establish by government to fix the price of product and monitor them at the same time.
Marketing Intermediaries: The middlemen are considered by the producers in fixing their price. If producers fixed high price to a product and the middleman will not know when how they will make profit, that is the price of product is unfavorable to middlemen i.e. wholesalers, and retailers, consumers. The product will not sell.
Company Objectives: Company has objectives of settling at a price level, so their increases or decreases of price lies much on their objective.
Pricing Objective: Price is a means to an end, here pricing objective is a goals, target or ends in which company achieves its objective
Profit Maximization: The economics of business is profit oriented and maximinization of profit but not all prices is profitable. The only thing that is there is firms choose the price that is higher to make high profit.
Satisfactory Rate of Return: The objective of company is satisfactory rate of return; it may be return on investment or return on sales. Return on investment is net profit divide by total investment while sales net profit divided by total sales. The satisfactory rate of return is differ from company to company, industry to industry to period to period depend on the economic situation. Lets say Chilachait Ltd is producing rice and set to achieve a 45 per cost on investment which is considered satisfactory while Neso Ltd is also producing the same rice may also set to achieve 40 percent on investment.
Market Share Objective: The importance of marketing performance market share, some company use price as their promotional tool to achieve market share. A market share is the company’s sales in respect of one product express as percentage of the total sales of the kind of product in the industry.
Destroy or Prevent Competition: Many company’s uses price as weapon for forcing out small and burden company’s. Many large firms engage must on this to destroy competitors even though selling at cost price to gain the market. They as well preventing new firms from entering into their market with their low price; firms wishing to enter may not meet up with the price already in the market.
Increased Sales: Increase in sales is very important in every firm. Although price plays the major rule as a weapon to succeed, Managers may reduce the price to increase sales. Because as price falls sales increase this is mostly happens when price is elastic.
Early Cash Recovery: This simply means that for a project or product, the price is fixed to a level so as to enable company recover its investment in product or project, the early recovering of capital investment reduces financial impact at feared risk.
Customer Welfare: This means reducing the price of product to the reach of every body and also increases volume of sales; this can be found in public companies.
Price Stabilization: This price objective is made not to encourage, initiation or fuel price war but competitors may retaliate over it to the company initiated it.
Promotional Pricing: A company reduces the price of a product, to increase volume of other products of their company, this attract customers to buy other brands of products at the company and using the profit of them to cover the loss leader.
PRICING METHODS
The pricing methods show what the company tends to achieve not they want to charge let us briefly look into the methods at pricing.
Mark -up Pricing and Cost-plus Pricing: What mark-up pricing and cost-plus pricing has in common is that, both place considerable profit on the cost at an item in price at arriving in the final selling price. Mark-up pricing is used to show the techniques many retailers where the final selling price is the cost price plus mark-up or the given percentage. The mark-up covers the expenses and also profit margin.
Variable Cost Pricing: The existence at company lies much on their profit, where a company does not make extra money from the cost price they will fold up or consider fixed and variable cost.
If a company consider to continue on the short run i.e. to cover the fixed cost while on the long run there will changes i.e. variable cost.
Target Pricing: Target pricing is a profit which a company wants to achieve over its fixed cost and variable cost plus the percentage.
Haggling: This is also referred as bargaining. It is the relationship between the buyer and the seller, which can result to a seller laying much emphasis on the product while the buyer given competitive comparison off the same brand. Here buyer offers low price as against the price of the seller, this at times brings offensive talks.
Imitational Pricing: Imitation pricing is a situation where price is fixed by a leading company then minor ones following behind by adding slightly to the price or reduces to sell.
Sealed Bid Pricing or Competitive Bidding: These involve contractors and suppliers in which they give quotation to the firm that require their services. The firms compare their prices and the quantity the will use, to ascertain the best that suit them.
Auction sale pricing: This is disposing government - owned or private-owned unserviceable properties to the highest bidder to buy.
Take your family and your self higher with unbelivable there here
Wednesday, March 31, 2010
GLOBAL MARKETING
GLOBAL MARKETING DEFINITION
Global marketing refers to marketing activities coordinated and integrated across multiple markets. Jonny K Johansson defines Global Marketing as a bigger brother to international marketing i.e. more of an extension. Muhlbacher, Helmuth, and dahringer defines Global Marketing as Global/transnational Marketing focuses upon leveraging a company’s assets, experience and products globally and upon adapting to what is truly unique and different in each country.
GLOBAL MARKETING ADVANTAGES
1. When a business goes global, it is important that you should benefit from the countless opportunities that the internet provides.
2. Aside from endless sales potential the business will eventually enjoy having an established world wide presence, this is very rewarding because a particular brand for example can be advertised on internet resources and customer can readily relate to it wherever they may be in the world.
3. Increased sales, higher profits, new knowledge and experience
GLOBAL MARKETING DISADVANTAGES
1. The competitive differences over various brands and product development.
2. The differences in consumer patterns such as needs and wants as influenced by their own regional.
3. Differences in legal concerns that may create conflict to that of the home market.
4. Language barrier, additional costs, changed mindset.
Global marketing refers to marketing activities coordinated and integrated across multiple markets. Jonny K Johansson defines Global Marketing as a bigger brother to international marketing i.e. more of an extension. Muhlbacher, Helmuth, and dahringer defines Global Marketing as Global/transnational Marketing focuses upon leveraging a company’s assets, experience and products globally and upon adapting to what is truly unique and different in each country.
GLOBAL MARKETING ADVANTAGES
1. When a business goes global, it is important that you should benefit from the countless opportunities that the internet provides.
2. Aside from endless sales potential the business will eventually enjoy having an established world wide presence, this is very rewarding because a particular brand for example can be advertised on internet resources and customer can readily relate to it wherever they may be in the world.
3. Increased sales, higher profits, new knowledge and experience
GLOBAL MARKETING DISADVANTAGES
1. The competitive differences over various brands and product development.
2. The differences in consumer patterns such as needs and wants as influenced by their own regional.
3. Differences in legal concerns that may create conflict to that of the home market.
4. Language barrier, additional costs, changed mindset.
Business plan
In Summary of Business plan, the entrepreneur prepare a document stating the nature of business, production level that the business expert to reach, human resources, the financial status etc.
The characteristics of a business plan should be simple; concise and clear in the sense that business plan should be clear so as to be readable and understandable by anybody even in your absence; accurate and supported with figures and data is a major area in which any investor will focus much attention to know the spending, earning and profit of the film. In this case entrepreneur should be accurate with figures and data not demanding more when profit is very low but demand less than initial money proposed; Also the plan should be truthful and realistic, the business plan should be fully trust, any entrepreneur that build on half-trust, exaggeration can never attract attention of investors, it is good to transparent business to financiers.
In writing business plan, the entrepreneur should give description of the investment and services. The financial business plan will be listed and what it will cover and when loan is expected to be paid. The executive summary of business plan gives the investor picture of business in which the points are highlighted. Analysis of industry is something cannot be overlooked as it details the performance of industry and gives overview of industry he is going to do business with and future of the industry. He should know the competitors and customers and know the competitor’s strength and weakness
The characteristics of a business plan should be simple; concise and clear in the sense that business plan should be clear so as to be readable and understandable by anybody even in your absence; accurate and supported with figures and data is a major area in which any investor will focus much attention to know the spending, earning and profit of the film. In this case entrepreneur should be accurate with figures and data not demanding more when profit is very low but demand less than initial money proposed; Also the plan should be truthful and realistic, the business plan should be fully trust, any entrepreneur that build on half-trust, exaggeration can never attract attention of investors, it is good to transparent business to financiers.
In writing business plan, the entrepreneur should give description of the investment and services. The financial business plan will be listed and what it will cover and when loan is expected to be paid. The executive summary of business plan gives the investor picture of business in which the points are highlighted. Analysis of industry is something cannot be overlooked as it details the performance of industry and gives overview of industry he is going to do business with and future of the industry. He should know the competitors and customers and know the competitor’s strength and weakness
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