Why Are Pricing Objectives Fundamental to Business Growth?

Introduction  

Pricing objectives in marketing are increasingly important in Product Management. Different types of pricing objectives help to accentuate the product management process and align your product pricing with your business goals. Product Management is a function in any organization that guides the steps of a product life cycle. From development to positioning and pricing, product management encompasses every aspect of creating and bringing a product to the customer. 

The pricing objective is an important part of the whole process to bring the best possible product at the best possible price to the customer. Marketing pricing methods must be designed to match performing products that will find customers and expand the customer base. As the pricing objective encompasses the pricing process for a product, it requires a customized and different price-determining strategy in order to be successful and align profits to business goals. From maximizing profits, boosting sales, matching competitors, and deterring competitors or just pure survival, pricing objectives in marketing have to keep evolving and cannot last forever. As market conditions change, business goals are redefined, and types of pricing objectives decided by organizations will reflect different aspects of the product management process. 

What Is a Pricing Objective?  

Pricing objectives in marketing for business growth are the goals that drive the business and those that are set to price the product or service. What are the pricing objectives for services or products? They are objectives that can and must apply to pricing services or products to target new and existing customers. The direction that pricing objectives or pricing strategy in marketing provide is crucial to make changes and adjust prices over a period of time to meet the vision and objectives of the company. Every pricing objective in marketing will need a different pricing strategy to meet business goals. Some types of pricing methods may work well for a pricing objective, while other combinations may contradict and fail. It is important to align pricing objectives and pricing strategy to ensure that pricing objectives in marketing meet business growth. 

Pricing objectives are the fundamental goals and underlying framework set by your company to determine how you price a product or service. Pricing strategy is the process that connects the pricing objectives in marketing to the external factors affecting the business. External factors could be market conditions, stock availability, consumer and market demand, and more. Pricing strategy in marketing is very important, as is pricing objective. Without a clear pricing strategy, you could miss key factors that could have a significant impact, and without a pricing objective, you could lose direction. 

Types of Pricing Objectives 

What are the pricing objectives of a service organization or one with a product on the shelves? What types of pricing objectives in marketing will work to achieve the business goals? Making a profit is the most sought-after type of pricing objective. However, there is more to the mantra of deciding on the types of pricing objectives for your business. Different types of pricing objectives adhere to achieving separate yet key targets. A few types of pricing objectives are: 

• Improving Retention            

Customer retention is undoubtedly an essential and key cost-effective part that a company needs to invest in to sustain its presence in the market. From offering noteworthy customer service to creating customer loyalty programs, increasing retention is one of the most important pricing objectives in marketing.    

• Maximizing Profits          

One of the conventional pricing objectives in marketing that every pricing strategy in marketing targets is improving profits. From short-term gains to long-term ones, organizations want to see a return on investment in the long run. Profit-based pricing objectives can vary and be challenging as they need it to be flexible. A lot of other factors like cost, packaging, and other associated costs indirectly have an impact on the pricing objective. 

• Increasing Sales Volume        

Some organizations may change their pricing strategies to improve sales. This could be to foster growth or make a place for itself in the market. An already established business will take an alternate route to increase sales volume by combining two products in one basket to lure customers and retain its customer base. 

• Competing With Similar Companies   

Pricing objectives in marketing is aimed at luring customers away from competitors and  that involve a lot of adjustment to pricing techniques and the product’s availability.  It is important to time the pricing objective to manage competition in the market too. Sales can be high during a particular period, and pricing objectives must consider these factors. 

• Shifting Brand Image 

Pricing objectives build the brand image. An expensive product creates an air of a luxury product in comparison to a cheaper one. However, a cheaper product could also have a significant base if it offers the key features that a certain group of consumers is looking for. 

Pricing Objective Example 

A brand with good equity could price its products higher than competitors in the market. For example, an Apple product tends to be more expensive than any other electronic product in the market. Most Apple products start off as limited-edition or niche products that are priced high at first. Once the brand or model is established, the price is lowered. Most Apple products also have offers on their products when bought together. For example, a consumer may get a good deal if he invests in an iPhone and an Apple watch at the same time. The strength of Apple products or similar ones like them is the unique product features and strong brand image in the market. 

Conclusion 

Pricing objectives are a lot more than deciding how to maximize profits. It reflects the goals and vision that one has for their brand. 60% of consumers consider the price of a product as the first criterion for buying. Most Product Management programs teach the importance of pricing objectives in marketing and online selling. If you want to learn more about pricing objectives and other important concepts, UNext’ PG Certificate Program in Product Management is highly recommended.