UNIT 4 DISCUSSION BOARD Essay Example | Topics and Well Written Essays - 500 words

UNIT 4 DISCUSSION BOARD - Essay Example This is why managers should base their pricing decision on solid ground. Major factors that should be considered are the market (i.e. customer demand), cost, actions of competitors, and political, legal, and image related issues. The process of determining customer demand is critically essential and continuous. It is even necessary to conduct market research. Though internal and production aspects such as quality are vital, managers must make certain that the product is not priced out of the market. The function of costs is based almost completely on market forces. Producers must meet the market by charging prices below the market price. Generally, both market forces and cost factors greatly affects prices. If a manager wants to effectively decide on pricing, he or she must keep an eye on the market. However, it should also be noted that costs must be covered in the long run. (http://www.canberra.edu.au/uc/lectures/mantech/accounting/sem981/unit4827/Lecture_Week_3_-_Pricing.txt). The pricing decisions that a manager makes should achieve the firm’s financial goals (i.e. profitability); meet up with the realities of the marketplace (by evaluating whether the consumers will buy at that price?); and keep up with the positioning of a product and with the other variables in the marketing mix. (http://en.wikipedia.org/wiki/Pricing#A_well_chosen_price_should_do_three_things:) However, legal issues should still be considered in pursuing these ends. Legislative restrictions are necessary because they prevent the possible setbacks or damages that individual firms’ pricing decisions could cost other firms, the consumers, or the economy in the aggregate. The law influences pricing decisions to entail responsibility. It creates awareness on the part of the firm to evaluate the consequences of their pricing decisions in a greater perspective. Moreover, the law influences pricing decisions in the sense that given price restrictions,