STRATEGIC MANAGEMENT ACCOUNTING

Strategic Management Accounting

Assignment for Strategic Management Accounting

The Models and Concepts Affecting the Pricing Decisions Taken By Organisations, Critically Reflecting Upon Their Usefulness

Introduction

Including customer retention and/or trial, market share, sales, and profit, a pricing strategy is aimed at fulfilling multiple objectives, in specific competitive/purchase situations and periods of time, for specific customers and products, a pricing strategy includes making choices of price discount policies and specific prices. How price changes affect the organization's objectives and how price changes are influenced by customer, competitive, and firm variables using and gaining knowledge. On firm objectives, purchase/competitive situations, time periods, customers, and specific product models, by making specific prices contingent, better pricing decisions comes out (Hoseason, 2003). Appearing shallow, the best answer to the question of how can the marketing strategist make better pricing decisions is deep, thus. Certainly one of the more complex, one of the most important decision is the setting of a price for a product. Having major consequences on other decisions, revenue is affected directly by a change in price. Sales are most likely to increase, if for example, the price is lowered. Concerning overhead, labour and material, needed with all its attendant requirements is additional production, therefore.

Discussion

From new capital investment and from the existing, to device the maximum profit, and increasing its sales, the long run survival of a business depends upon the firm's ability, because the pricing policy plays an important role in a business. In pricing decisions, frequently far more significant are competitive environment and consumer demand, although an important aspect of pricing is, cost. Prices are not determined alone by costs, thus. Determining the prices; of the many complex factors, cost is only one. By the utilisation of internal surplus, if production is to be maximised and capital unimpaired, some margin in prices over total cost must be there, however (Hoseason, 2003). Having a number of noteworthy benefits, for making better pricing decisions as an aid, a pricing system model is to be used and designed. Shared learning, knowledge, insights and commitment among decision makers in an organization about the specific strategy and pricing goals to achieve these goals, understanding of the feedback loops of causality that cause instability, downward and counter-productive spirals in performance, and deeper understanding of the interaction and main effects of the variables recognizing multiple pricing goals and, influencing pricing changes, are the four such benefits described in this section (Monroe, 1978). From mapping and formal study of pricing systems the directionalities of the influences on price occurs usually as more valid, and deeper, understanding. Requiring higher prices and, consequently, higher costs, that increases in product quality is, a central proposition traditionally relating product pricing and quality, for example. Such high quality levels require high per unit manufacturing costs, entailing the adoption of more expensive raw materials and production technology, and the belief that high quality levels are usually included in the rationale for this view. As a business unit strategy, these studies demonstrate the compatibility of low cost ...