Pricing is considered as part of 4ps of marketing mix. Understand the factors that affect a firms pricing decisions. Factors influencing purchase intention of starbucks. Three quality factors in particular were found to be of interest for further investigation. Opinion leaders play a key role in influencing the buying behavior of their followers. There are several factors a business needs to consider in setting a price. External factors that affect pricing decisions essay 303 words. The reason is that the price is a very sensitive issue for the customers in their purchasing behavior. Main factors affecting price determination of product are.
Until recently it has been one of the most neglected areas. Your product or service prices impact your profitability as well as the perception of your brand in the marketplace. Price strongly influences quality perceptions of such products. Costs and profits are two dominant factors having direct impact on selling price. Factors influencing pricing decisions in selected banks in the banking industry in nairobi, kenya. Factors influencing pricing video lecture from marketing decisions part 1 chapter of tybcom marketing subject for tybcom students. Factors affecting pricing as noted, the main reason for entering different markets is to increase the income and profitability.
In determining a pricing policy, a company should not only consider the immediate effect of prices, but also give due weight to the reaction of competitors. Stable markets have structures that are more routine. Managers need to be aware of the factors influencing organizational design as they build structures that will work the best for their strategies and market. Companies develop pricing strategies after considering a variety of factors. Join s of fellow business teachers and students all getting the tutor2u business teams latest resources and support delivered fresh in. Analysis of factors influencing project cost estimating. However, we will consider internal and external factors affecting pricing decisions.
It is the display of the store which attracts passing individuals into the store. In the present research, the factors affecting the domestic and international transfer pricing decisionmaking process and the objectives of transfer pricing methods in mncs are investigated using both fullsample and matchedpairs. Pricing factors to consider when setting price business. Pricing is the marketing function that involves determination of value of a product or service in monetary terms before it is offered in the market for sale price is the marketing mix element that produces revenue. Methods for collecting and analysing data are also discussed. This paper examines factors that affect pricing decision for export markets, and. Figure 2 shows a list of internal and external factors. The factors affecting pricing decisions are varied and multiple. With so many products sold online, consumers can compare the prices of many merchants before making a. The final price for a product might be influenced by numerous factors. Key factors influencing pricing strategies for small.
Cost one o f the most imp ortant factors affecting pr icing is pro duction and market costs of products. Pricing, channel structures and advertising mcleish ukomatimi otuedon dba scholar, smc university, vorstadt 26a, 6302 zug, switzerland abstract this paper examined the basic factors that affect price in any market and the factors that influence channel. It is everything that a customer has to give up in order to acquire a product or service. External factors that affect pricing decisions essay 303. Factors that influence consumer purchasing decisions of.
What are the factors influencing pricing decisions in a. External factors that affect pricing decisions external factors there are a number of influencing factors which are not controlled by the company but will impact pricing decisions. Pricing is often one of the most difficult things to get right in business. Factors influencing pricing decisions management study hq. This project focused on the study of the factors inf1uencing pricing decisions in selected banks in nairobi in kenya. Pricepricing objectives, factors, methods, strategies. Clipping is a handy way to collect important slides you want to go back to later. Reaction of competitors influence pricing decision. Introduction pricing is simply the money charged for a product or service. Let us now discuss the external factors in this article. Factors influencing strategic decision making processes mahmood nooraie ph. The following are the factors that influence the increase and decrease in the price of a product internally. Other external factors some other external factors can affect setting the price such as. Following are the two main factors affecting pricing.
Factors influencing strategic decisionmaking processes. Factors influencing pricing decisions in selected banks in. Factors that influence choice of travel mode in major. Mar 20, 2016 this lesson will also develop students key analysis and judgement skills vital for success in exams by evaluating which pricing decisions are most effective for particular types of businesses and the most important factors which influence their pricing decisions. The external factors affecting the pricing decision of a firm are. This lesson will also develop students key analysis and judgement skills vital for success in exams by evaluating which pricing decisions are most effective for particular types of businesses and the most important factors which influence their pricing decisions. Here, costs include product development costs, production costs, and marketing. The most important factor affecting the price of a product is its cost. There are certain factors that include pricing decisions. Factors influencing purchase intention of starbucks page 2 of 142 cultivated around the world in more than 60 countries and is the worlds second most valuable traded commodity behind crude oil international coffee organization, n. A customer always compares the companys prices with those of its competitors.
As for internal factors are concerned, please refer to this article. A stated preference survey has been conducted in order to quantify some standard factors. Factors influencing pricing marketing decisions part 1. Customers use price as an indicator of quality particularly for products where objective measurement of quality is not possible, such as drinks and perfumes. Those factors include the offerings costs, the demand, the customers whose needs it is designed to meet, the external environmentsuch as the competition, the economy, and government regulationsand other aspects of the marketing mix, such as the nature of the. Factors affect ing pricing can be examined unde r six titles. This means that the management of the business should take into account the change in the price and offering of the competitors and take steps accordingly. In each of these categories some may be economic factors and some psychological factors, again some factors may be quantitative and yet qualitative. Abstractglobally, the term, marketing is not a new phenomenon. What are the factors influencing pricing decisions in a market. If price is lowered, for example, then sales is most likely to increase. It should call for an effective market intelligence of the competitors pricing decision. Factors can be categorized into two, depending on the variables influencing the price.
Factors affecting international marketing strategies. Influencing factors, methods and economic approach. Psychological factors influencing consumer behavior. These attitudes and beliefs are the tendency to respond to a given product in a particular way, and these make up the brand image that influences the consumer buying behavior. Request pdf factors influencing pricing decisions in this paper, we look at factors that affect how marketers set price.
Marketing management pricing decision tutorialspoint. Analysis of variance, which tests the null hypothesis that the opinions of the four categories of companies are not significantly different, shows that except for the procurement route and contractual arrangement factor there is no difference of opinion, at the 5% significance level, on the factors influencing cost estimating. There are several factors which affect the buying decision of the customers. Pricing product, external and internal factors affecting. If a product is priced higher, the instinctive judgement. Although extensive research has been undertaken on factors influencing the decision to tender and markup and tender price determination for construction projects, very little of this research contains information appropriate.
Product cost refers to the total of fixed costs, variable costs. Jun 16, 20 external factors that affect pricing decisions external factors there are a number of influencing factors which are not controlled by the company but will impact pricing decisions. Setting prices that are too high can prevent customers from buying your products. No commodities can move from a production point to a consumption point without putting the. Internal factors are internal to organisation and, hence, are controllable. Understand why companies must conduct research before setting prices in international markets. Pricing decision analysis the setting of a price for a product is one of the most important decisions and certainly one of the more complex. The individuals have certain beliefs and attitudes towards products on which their purchase decisions rests. They are broadly classified into internal and external factors. Marshall has developed the theory of how price influences customers.
What the presentation covers a brief of how to strategize international pricing factors affecting pricing decision factors influencing pricing decisions pricequality relationship. Many factors, specificities and characteristics influence the individual in what he is and the consumer in his decision making process, shopping habits, purchasing behavior, the brands he buys or the retailers he goes. Factors affecting pricing decisions business study notes. Recognizes that several factors are relevant to pricing decision local costs income levels competition local marketing strategy global marketing schrage 1129 gray market goods trademarked products are exported from one country to another where they are sold by unauthorized persons or organizations. Let us analyze some of the main factors influencing pricing decisions. These factors were walking distances to station or. Even today, pricing in some firms is simply based on the concepts of cost, market position, competition and necessary profits. A companys price level sends signals about the quality of its products to the customer. Higher colleges of technology, sharjah, united arab emirates. Factors that influence consumer purchasing decisions of private label food products a case study of ica basic thu ha, nguyen 900524. Factors that influence choice of travel mode in major urban areas. Kotler and armstrong, 2012 and global marketers must understand the factors that affect the pricing decisions they make tanner and raymond, 2012. Notes on factors affecting individuals buying decisions. Factors affecting buying decision of the customers at the.
Internal factors affecting pricing decision to know a list of factors affecting pricing decisions. Factors affecting buying decision of the customers at the store. Pricing decisions strategies and factors that influence. One of the key elements of a product, which enters in to a new market, is its price. In management, islamic azad university, abhar branch, iran email. Economic factors like inflation deflation and interest rate affect selling price because they affect cost of production and consumer perceptions related product. The relative market shares or market strength of competitors influences whether a business can set prices independently, or whether it has to. Is the price competitive given local market conditions. In figures, according to the statistics provided by international coffee. Factors affecting pricing decisions mba knowledge base. Selling price is the amount for which customers are charged for some product manufactured or for a service provided by the firm. Quickchanging markets need structures that are nimble and can provide rapid responses. The store display plays an important role in influencing the buying decision of the customers.
Internal factors when setting price, marketers need to take into consideration. Internal forces and external forces two categories of factorsinternal and external factors influence the pricing decisions of any enterprise. Factors that affect pricing strategies for international. Understanding these factors requires the marketer conduct research to monitor what is happening in each market the company serves since the effect of these. Influence of reference group on consumer buying decision depends on the nature of the person, type of product and other social factors. External factors that are considered to influence an organisations pricing strategy include. We would like to divide them as internal factors and external factors. The competitors also keep an eye on the price levels of a company. The factors used in this stated choice experiment were. There are number of factors affecting the pricing decisions and price is not determined simply, there are many factors affecting pricing decisions.
A change in price not only directly affects revenue but has major consequences on other decisions. Pricing of a product or service refers to the fixation of a selling price to a product or service provided by the firm. Pricing of a product is influenced by various factors as price involves many variables. Factors influencing pricing decisions request pdf researchgate. Pricing decision of an organization is affected by various internal and external factors. Pdf pricing strategy has played an important role in consumer purchasing behavior. The perception is the process through which the individual selects, organize and interpret the information to draw a meaningful conclusion. A purchase decision is the result of each and every one of these factors. How an individual mnc actually chooses methods when it has both types of transfers has not been investigated. The consumer perception towards a particular product and the brand also influences his buying decision. Due to these factors, price is set high or low, fixed or variable, and equal or discriminative. International pricing decisions linkedin slideshare. Now customize the name of a clipboard to store your clips.
External factors there are a number of influencing factors, which are not controlled by the company but will impact pricing decisions. Factors that affect price in any market and pricing decision this paper has divided the factors, which affect pricing and piecing decisions into two main categories, both categories are explain in detail below. Price refers to the exchange value in terms of money of products and services which provide a bundle of satisfaction to the consumer. Sep 15, 2012 pricing the product is one of the important element in marketing mix.
Factors influencing pricing strategy your business. Understanding these factors requires the marketer conduct research to monitor what is happening in each market the organization serves since the effect of these factors can vary by market. However the interpretation and decision making is different among individuals and also influenced by internal consumer behavior perception, altitude, and motivation and external factors family roles, peer influence and group influence. Some of the major factors influencing pricing decisions of a company are as follows. Psychological factors influencing consumer behavior definition. Researchers have argued that pricing has played a critical role in consumer buying behaviour and decision making process musonera and ndagijimana, 2008. Factors influencing pricing decisions abbott j haron higher colleges of technology, sharjah, united arab emirates.
A firm also has to look at a myriad of other factors before setting its prices. Localized advertising factors that affect price in any market and pricing decision this paper has divided the factors, which affect pricing and piecing decisions into two main categories, both categories are explain in detail. Pdf an examination of factors that affect pricing decisions for. Internal forces and external forces two categories of factors internal and external factors influence the pricing decisions of any enterprise. Basically, the prices of products and services are determined by the interplay of five factors, viz. Pricing the product is one of the important element in marketing mix. Some other external factors can affect setting the price such as. Factors influencing strategic decisionmaking processes mahmood nooraie ph.