NAME SHIVAM PATEL

  :-
 
ROLL NO  
  :-
 
SUBJECT MARKETING
  :-
 
STANDARD 12TH COMMERCE -A
  :-
 
SCHOOL NAME SHREE SWAMINARAYAN ACADEMY
  :-
 
FOLLOWING CONSIDERATIONS
TOPIC (A) OBJECTIVES OF PRICING
(B) INTERNAL & EXTERNAL AFFAIRS
  :- (C) ANALYSIS OF MARKET SITUATION
  (D) METHODS OF PRICING(SUPPORTING A NUMERICAL
EXAMPLE)
SUBMITTED TO MRS.SWETA SHAH
  :-
 
ACADEMIC YEAR 2021-2022
  :-
 
 ACKNOWLEDGEMENT
I would like to express my special thanks of gratitude to my learned
teacher Mrs. Sweta Shah and to worthy principal, Mrs. SUKLA
PATRA MAM who provided me not only motivation but valuable
guidance to realize the application of ‘OBJECTIVES OF
PRICING, INTERNAL AND EXTERNAL AFFAIRS,
ANALYSIS OF MARKET SITUATION, METHODS OF
PRICING’ . In the process I got ample opportunity to do research,
’

which enriched and broadened my knowledge and understanding of

this area, I am sincerely indebted to them.

Secondly I would like to thank my parents and friends who inspired

and helped me in finishing the project on time.
  Thanks again to all those who helped me.
 PREFACE
I am pleased to submit project work in ‘Marketing’ for class XII.I
am extremely thankful to CBSE for introducing the project in
Marketing. The project has given an ample opportunity to
explore various areas of ‘OBJECTIVES OF PRICING,
INTERNAL AND EXTERNAL AFFAIRS, ANALYSIS OF
MARKET SITUATION, METHODS OF PRICING’, this
increased my understanding of the concepts studied. It also gave
me unique experience as I visited many places and interacted
with various people. This project is an attempt to allow reader to
understand the PRICING POLICY ADAPTATION BY
DIFFERENT MANUFACTURNG AND SERVICE FIRMS
The project is strictly according to CBSE 2021-22.
 Profitabilit
y objective

Pricing
Objectiv
e
Market- Public
Related Relation
Objective objective
 Profitability Objective
• Target Rate of Return on Investment or Net Sales
This is an important goal of pricing policy of many firms. In this,
the price represents cost of production and profit margin.
The basic objective is to build a price structure to provide
sufficient return on the investment or capital employed.
• Profit Maximization
In practice, no firm expressively states this as an objective for fear
of public criticism. However, in economic theory, profit
maximization is an important objective for any business for its
survival. In recent times though, the business philosophy has
changed. Businessmen have started to think from the perspective
of society instead of only focusing on maximizing profits, and
have incorporated business with other activities which help fulfill
their societal obligations.
 Market-Related Objectives
• Meeting or Preventing Competition in the Market:-
Some firms adopt pricing policies to meet or prevent competition in the
market. They are ready to fix their prices at a competitive level to meet
competition in the market. They even follow “below cost pricing”, that
is, charge less than the cost because they believe it will prevent new
firms from entering the market.
• Price Stabilization:-
Price Stabilization as an objective is prevalent in industries that have a
priceleader. For example, in an oligopoly, there are only a few sellers
which follow one big seller who acts as the price leader, and try to
stabilize their prices simultaneously. No firm is willing to engage in
price wars. They may even forego maximizing profits in times of
prosperity or short supply in order to stabilize prices. This is because
price stability helps in planned and regular production in long-run.
 Market-Related Objectives
• Maintaining or Improving Market Share:-
Market share is meaningful measure of success of a firm’s
marketing strategy. This price objective helps to maintain the
market share, i.e. either to increase or sometimes to decrease it.
This pricing objective is followed by firms operating in
expanding markets. When a market has a potential for growth,
market share is a better indicator of a firm’s effectiveness than
target return on investment. A firm might be earning a reasonable
rate of return on investment or capital employed but its market
share could be decreasing. Target market share means that sale
which a company wishes to attain and it is normally expressed as
a % of the total industry sales. Therefore, this is a worthwhile
pricing objective for firms operating in expanding markets.
 Public Relations’ Objectives
• Enhancing Public Image of the Firm:-
A company’s public image is important to its success. Every company has
an identity representing what it has done to convey the public about its
product, packages, trademarks, brand names, employees and the marketing
programmer. This image is deeply influenced by how the company
handles the delicate and sharp weapon of pricing.
• Resource Mobilization: –
Resource Mobilizing means the creating resources for either self –
development or reinvestment in the firm. Prices are deliberately set high in
certain cases to generate surplus for reinvestment in the same firm or its
sister concerns, e.g. petrol rates are kept very high as it yields a good
surplus because gasoline automobiles depend fully on petrol. As a
governmental exercise, it works well as the public escapes tax on their
backs. This objective of price is mostly found in the developed countries
where it adds to the Exchequer for reallocation.
 Internal Factors affecting Pricing

Different
Company’s Marketing
Characteristic
Management Mix Strategy
s

Overall
Costs Objective of
the Company
 Company’s Management
• When it comes to setting the price of the product, then it
involves two parties; the marketing team and production staff.
However, the marketing team comprises of company’s
management, top executives, and marketing staff. They
consider how the product would play out in the market.
• One the other hand, the production team considers the
production costs and product strategies. Usually, the final price
considers both the views of the product and marketing teams
 Marketing Mix Strategy
• Marketing mix means product, price, promotion, and place. Some
marketing experts view price is the only dominant factor in the mix
because a slight change in price can affect the promotion and
distribution of the product at different places. Some companies
lower the prices as a part of their marketing strategy to attract the
attention of the price-conscious market.
• While other companies increase the prices as a part of their
marketing strategy. It doesn’t matter whether the company/business
lowers the prices or increase it. The price strategy would only
succeed if it follows the overall marketing objectives of the
company. If a brand raises the prices, then it should add some more
features and start a new marketing campaign.
 Different Characteristics
• Characteristics of the product are the key to the price decision
of the company because different characteristics of the product
in terms of shape, color, size, packaging, etc. attract the
attention of the customers. Customers are willing to pay more
if they like and value the characteristics of the product. It could
be a new style, feature, or anything out of the ordinary.
 Costs
• The cost of the product is the most important factor among all
because it provides the basis to set the price. Of course, the
management has to consider the product’s demand and the
prices of the competitors as well. Finally, the management also
considers the customers’ ability to pay the price, because it
would be useless to avoid customers in the price decision.
 Overall Objective of the Company
• A company may have various objectives. It could be profit
generation, increasing market share, the company’s value-
oriented, increasing or decreasing customers’ volume,
maintaining a stable price and the company’s brand image, etc.
Therefore, the final price decision also matches with the
overall objectives of the company.
External Factors Affecting Pricing Decision

Demand in Company’s
the Market Competitors Suppliers

The
Local
Economy of Customers
Government
the Country
 Demand in the Market
• The demand for the company’s product in the market also plays
a huge role because it tells us about the competitors, size of the
market, and customers’ preferences and their ability to pay the
price.
• Sometimes, a company charges different prices to customers in
different markets. The purpose is to check the results that how
the market is behaving at different pricing strategies. If the
demand for the company’s certain product is higher, then the
price would be higher. If the demand is lower, then the company
would lower its prices than competitors to compete in the
market.
 Competitors
• Market competition is a very significant factor and it affects
the price strategy. A firm may set high or low prices depending
upon the competitor’s prices and product quality. If the
company’s products are better than competitors, then the price
would be higher. Otherwise, the business would set lower
prices.
 Company’s Suppliers
• Suppliers provide the raw material to the company from which
the business manufactures the final product. If the suppliers
raise the prices, then the company has no choice but to increase
the prices and pass it on to the customers.
• If a company is making more profit on a certain product. When
the suppliers see it, they would raise the prices of the raw
material because they want to have a portion of the profit as
well. However, it also depends on the abundance and scarcity
of the product’s raw material.
 The Economy of the Country
• If the economy of the country is prosperous where people are
employed and earning high salaries, then raising prices
wouldn’t be a problem. In such an environment, customers are
willing to pay more. However, when the economy of a country
is in a recession, where people have limited sources of income.
Businesses and companies have to set low prices to meet the
customers’ ability to pay.
 Customers
• We have been talking about the customers’ ability to pay. It’s
very important to consider the nature and behavior of the target
market. Some customers are price conscious and the others are
quality conscious. Therefore, you should know the nature of
your target market.
Local Government
• Sometimes the government controls the prices of certain
products by introducing some laws. The purpose is to control
inflation so that the prices shouldn’t go higher at a certain
point. Therefore, the company has to consider the local laws of
the government as well.
 Cost
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 COST-BASED PRICING
• Under cost based pricing the marketer primarily looks at
production costs as the key factor in determining the initial
price. This method offers the advantage of being easy to
implement as long as costs are known.  But one major
disadvantage is that it does not take into consideration the
target market’s demand for the product. This could present
major problems if the product is operating in a highly
competitive market where competitors frequently alter their
prices.
MARKUP ON COST
• Using this method price is determined by simply multiplying
the cost of each item by a predetermined percentage then
adding the result to the cost. A major general retailer, may
apply a set percentage for each product category (e.g.,
women’s clothing, automotive, garden supplies, etc.) making
the pricing consistent for all like-products.  Alternatively, the
predetermined percentage may be a number that is identified
with the marketing objectives (e.g., required 20% ROI). 
The calculation for markup on cost is:
Item Cost + (Item Cost x Markup Percentage)  = Price
50          + (50 x .30)                          = Rs 65
COST-PLUS PRICING
• Cost-plus pricing also adds to the cost by using a fixed
monetary amount rather than percentage. For instance, a
contractor hired to renovate a office owner’s office will
estimate the cost of doing the job by adding their total labor
cost to the cost of the materials used in the renovation.  The
homeowner’s selection of carpet to be used in is likely to have
little effect on the labor needed to install it whether it is a low-
end, low priced tile or a high-end, premium priced carpet. 
Assuming most material in the office project are standard sizes
and configuration, any change in the total price for the
renovation is a result of changes in material costs while labor
costs are constant.
 BREAKEVEN PRICING
• Breakeven pricing is associated with breakeven analysis, which is a
forecasting tool used by marketers to determine how many products
must be sold before the company starts realizing a profit.The
formula for determining breakeven takes into consideration both
variable and fixed costs as well as price, and is calculated as follows
• Fixed Cost = Number of Units to Breakeven Price – Variable Cost
Per Unit
• For example, assume a company operates a single-product
manufacturing plant that has a total fixed cost per year of Rs.
3,000,000 and the variable cost (e.g., raw materials, labor,
electricity, etc.) is Rs per unit.  If the company sells the product
directly to customers for Rs.120, it will require the company to sell
40,000 units to breakeven.3,000,000  = 40,000 units
 TARGET RETURN PRICING
• In this method marketer sets price to achieve a target return-on-
investment (ROI). For example, let's assume that marketer
have invested Rs.10,000 in the company. Expected sales
volume is 1,000 units in the first year. Marketer want to earn
all his investment in the first year, so he need to make
Rs.10,000 profit on 1,000 units, or Rs. 10 profit per unit,
giving a price of Rs. 60 per unit.
VALUE-BASED PRICING
• Companies price their product based on the value it creates for the
customer. This is usually the most profitable form of pricing, if one can
achieve it.In this method it is the buyers perception of value and not the
sellers cost which is the key to the product pricing.Let's say that a tube
light manufactured by Mahamaya Electric Devices saves the typical
customer Rs.1,000 a year in, say, energy costs. In that case, price tag of
Rs.60 seems too cheap. If the product reliably produced that kind of
cost savings, company could easily charge Rs.150, Rs.200 or more for
it, and customers would gladly pay it, since they would get their money
back in a matter of months.
• Value Example : ITL Tractor is Rs 100,000 vs. Market Rs. 90,000Rs.
90,000 if equal7,000 extra durable6,000 reliability5,000 service2,000
warranty Rs. 110,000 in benefits - Rs. 10,000 discount!
PSYCHOLOGICAL PRICING
• This method takes into consideration the consumer's perception
of price. Odd-Even Pricing: a product priced at Rs may be
perceived as offering more value than a product priced at Rs
 Prestige Pricing: The higher the price the more likely
customers are to perceive it has being higher quality compared
to a lower priced product. marketers, looking to present an
image of high quality, may choose to price products at even
levels (e.g., Rs. 100 rather than Rs.99.99).
MARKET PRICING
• Under the market pricing method cost is not the main factor
driving price decisions; rather initial price is based on analysis
of market research in which customer expectations are
measured. The main goal is to learn what customers in an
organization’s target market are likely to perceive as an
acceptable price. 
COMPETITION BASED PRICING
• When setting price it makes sense to look at the price of
competitive offerings.  For some, competitor’s price serves as
an important reference point from which they set their
price. Below Competition Pricing: A marketer attempting to
reach objectives that require high sales levels (e.g., market
share objective) may monitor the market to insure their price
remains below competitors. Above Competition Pricing:
Marketers using this approach are likely to be perceived as
market leaders in terms of product features, brand image or
other characteristics that support a price that is higher than
what competitors offer. Parity Pricing: A simple method for
setting the initial price is to price the product at the same level
competitors price their product.
Market Situation Analysis
• A situation analysis is the one tool every marketer needs to ensure her marketing tactics
are taking advantage of real opportunities and solving real problems. In other words, it
provides the context you need to move forward with your planning.
• Your situation analysis helps you define the context for your marketing plan by looking
at trends, customer preferences, competitor strengths and weaknesses, and anything
else that may impact sales. The question your situation analysis must answer is,
“What’s happening?” To answer this question, you should analyze the most important
market changes affecting your company. These changes can be the sources of problems
or opportunities.
• To prepare a situation analysis, you must consider challenges and trends that can affect
your marketing program, be prepared for economic cycles, and review your
competition’s current status. After you identify these threats and opportunities, you
need to give some serious thought to how to respond to them.
• Your marketing strategies are basically your responses to your strengths, weaknesses,
opportunities, and threats, so your situation analysis feeds naturally into your strategies
and plans.
SWOT ANALYSIS
• Strengths: Identify the strong points of your products, brand image, and marketing
programs so you know what to build on in your plan. Your strengths are the keys to your
future success. For example, if your website is a strength, then your plan should focus on
making it even better, and your objectives should include increased web sales.
• Weaknesses: Pinpoint the areas in which your products, brand image, and marketing
programs are relatively weak. For example, perhaps you have several older products that
are losing to hot new competitors, or maybe you rely too heavily on newspaper
advertising (which is a weakness, because newspaper readership is dropping). Your plan
should propose changes that shore up or eliminate weak products and practices.
• Opportunities: Your situation analysis needs to look for opportunities, such as a hot new
growth market you can participate in or an exciting new way to reach prospective
customers.
• Threats: A threat is any external trend or change that can reduce your sales or profits, or
make it hard to achieve your growth goals. Common threats include new technologies
that create new competitors, large competitors that can outspend you, and economic or
demographic shifts that cut into the size or growth rate of your customer base.
Conclusion
• An organization can adopt a number of pricing strategies; the pricing strategy will usually be
based on corporate objectives
After selecting a pricing objective you will need to determine a pricing strategy. This will
assist you when it comes timeto actually price your products. As with the pricing objectives,
numerous pricing strategies are available from which to choose. Certain strategies work well
with certain objectives, so make sure you have taken your time selecting an objective. Careful
selection of a pricing objective should lead you to the appropriate strategies. If the pricing
strategy you choose seems to contradict your chosen pricing objective, then you should revisit
the questions posed in the introduction and your marketing plan.
Additionally, different pricing strategies can be used at different times to fit with changes in
marketing strategies, market conditions, and product life cycles. For example, if you’re
working under a status quo pricing objective with competitive pricing as your strategy due to
poor market conditions, and a year later you feel that the market has improved, you may wish
to change to a profit margin maximization objective using a premium pricing strategy.
In the conclusion of pricing strategies, setting the price for the company’s products and
services are a vital roles and important parts for our business success, through the
understanding the distinct between cost and price which company charge the appropriate and
best price which means customer is willing to pay a price to your products then can maximize
sales volume and profit margin.
Bibliography
• www.slideshare.net
• Mrs. Sweta Shah
• Marketing Study Material