The purpose of profit-oriented

23

a. The purpose of profit-oriented

Companies can choose one of two goals in a profit-oriented pricing policy. Profit-oriented goals can be reached in the short term or long term. 1 Achieving the target profit Companies can choose to set the price of its product reaches a certain percentage of the sales or investments. Achievement of objectives as it is applied by a broker or producer. Many retail and wholesale trade businessman using profit targets on net sales as pricing objectives of short-term period. 2 Increase profit Pricing objectives to earn money as much as possible followed by a large number of companies than other purpose. Difficulties faced this purpose is that the term connotes bad maximize profits associated with high prices and monopoly. The purpose of enlarging profits the company would be more profitable if applied in the long term. However, to apply these companies have to accept losses in the short term. b. Goal-oriented sales 1 Increase the volume of sales Pricing of several companies focused on sales volumes during a certain period, for example, 1 year or 3 years. Management aims to increase sales volume by providing discounts or aggressive 24 pricing strategy although others should experience a loss in the short term. 2 Maintaining or increasing market share Some companies large or small set the price for the purpose of maintaining or increasing market share of the company. For example, when the Japanese currency YEN value exceeds the value of the US dollar, Japanese products become more expensive in the United States. Japanese companies are faced with the prospect of reduced market share. To maintain market share, Japanese companies accept smaller profit margins and reduce costs so it can sell products at a price below the selling price should. 4. Factors affecting the price level According to Hasan 2007: 304 companies must understand the factors that directly affect the price level to be determined: a. Economic conditions Economic conditions inflation, boom or recession, interest rates, government policies and regulations, and social aspects environmental awareness greatly affects the price level prevailing. 25 b. Demand and supply Request a number of products purchased at a certain price level. Important issues in this factor are to estimate how buyers respond to the prices offered an alternative. While offers a number of products offered by the company seller at a certain price level. Generally, the higher prices encourage the offered amount becomes larger, but in certain cases it turns into a scarcity of goods is higher. c. The companys goals The companys goal to be achieved is stated explicitly, such as: 1 Achieving maximum profit 2 Maintaining the viability of the company 3 Creating a quality leadership 4 To increase the volume of sales 5 Reaching a large market share, maintain and improve market share 6 Creating a stabilization of prices and overcome the competition 7 Return of capital tied up in a certain period 8 And so forth d. Legal and ethical factors These factors usually becomes a tool of government oversight in determining the maximum, minimum, or a certain price for grain, freight, fuel, interest on the loan, price discrimination dues Tv, 26 electricity as well as the practice of other practices that prevent efforts towards monopoly. e. Marketing mix Pricing should be coordinated and mutually supportive with other marketing mix of product, distribution and promotion. f. Cost Cost is the basic factor in determining price is minimal, because the level of price that cannot cover the costs will result in losses. The costs that must be considered in the determination of prices at least as: 1 The cost of out-of-pocket costs increase, opportunity costs, controllable costs, replacement costs, non-operating expenses 2 Structure costs 3 The cost volume relationship 4 Competitive advantage 5 Effect of experience costs 6 How much influence the cost of the companys future g. Size of business Management needs to decide who should set prices, for example, by top management, product line management, sales managers, production managers, financial managers, and accountants. 27 h. Competition The forces that influence the competition in the industry is the competition in the relevant industry, product substitution, suppliers, customers, and the threat of new entrants. i. The nature of the market Each company needs to understand the nature of market linkages and demand that it faces, whether including perfect competition, monopolistic competition, oligopoly or monopoly.

E. Word of Mouth