Microsoft Word marketing doc

Determining Demand 
The next step is to determine the demand for the product of the company.
Different prices will lead to different levels of demand for a product and, 
therefore, will have different effect on the marketing objectives of a company.
As we are familiar, demand and price are, usually, inversely related, i.e., when 
price increases demand decreases and vice-versa. 

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Estimating costs 
The third important step in price setting is to make an accurate estimate 
of different type of costs involved in manufacturing and selling a product of the 
company. Company wants to charge a price that covers all of its costs of 
producing, distributing and selling the product and yields a fair return for its 
efforts and risks. The costs set a floor to the price of a product whereas demand 
sets a ceiling. 
Analysing competitors price and offers 
A marketer cannot afford to ignore the competitors’ prices. In fact, 
competitors prices and possible price reactions help a marketer establish where 
his prices might be set. A company should learn the price and quality of each 
competitor’s offer by sending out comparison shopper to buy and find out the 
competitor’s price and offers lists or by obtaining competitors price buying
competitor’s equipment and taking it apart. 
Selecting a pricing method 
After determining the demand, estimating costs and analyzing 
competitors prices and offers, the company has to select price for its product.
The price of any product will be somewhere between one that is too low to earn 
a profit and one that is too high to create setting. 
(i)
the costs of the product which set a floor to the price and the price 
cannot usually be set below the cost. 
(ii)
Competitors prices and the price of the substitutes which provides 
an orienting point to be considered by a company. 
(iii)
The unique product features in the company’s offer which 
establish the ceiling on the price of its product. 
Companies may selecting any pricing method that includes the aforesaid 
considerations. Let us describe in brief some important and popular pricing 
methods. 
1.