V. MARKETING BASICS

12. Development of pricing policy

Pricing policy is seen as a decisive marketing tool. The price level is considered a reliable indicator of the functioning of competition. Price competition arises not only between commodity producers, but also between producers and trade. The manufacturer would like to control two prices: the wholesale price of the enterprise and the retail price, because its revenue depends on the first price, and the second affects the positioning of the product. However, the legislation of many states assigns the right to set retail prices to retail trade enterprises. This limits the manufacturer's capabilities, because he can only guess what price the trade will set at his wholesale price and the usual trade margin.

Price in a broad sense refers to all subjective and objective costs associated with the acquisition and use of a product.

Subjective costs include such intangible costs as loss of time, comfort, or the feeling of lost profits.

Objective costs are the actual price of the product and any additional alienation of cash or other material resources of the buyer of this product, i.e. this is the base price and the price of additional services (transport, discounts, repair costs, etc.).

The process by which an enterprise sets prices for its goods includes at least six stages:
1. Setting pricing objectives.
2. Determination of demand.
3. Estimation of production costs.
4. Conducting an analysis of prices and products of competitors.
5. Choosing a price setting method.
6. Determination of the final price and the rules for its future changes.

Characteristics of approaches and pricing methods are given in Table. 12.1.

Table 12.1

Characteristics of approaches and pricing methods

Approaches and methods	Brief description of approaches
1. Pricing based on cost 1.1. Cost plus profit method 1.2. Checkpoint Analysis Method	The manufacturer determines the price of the product based on its cost. The condition for applying the approach is the stability of the cost over time or its slight change. The main disadvantage is that the level of demand for the product is not taken into account when determining the price.
2. Pricing based on profit 2.1. Profit Maximization Method 2.1. Comparison of gross income with gross costs 2.1.2. Comparison of marginal revenue with marginal cost. 2.2. Target profit method. 2.3. Target profitability method 2.4. Target profitability method investments.	To achieve the desired level of profit, the balance of gross (marginal) income and gross (marginal) costs is calculated. The target profit can be determined either by directly calculating it or by maximizing it. Direct definition of target profit can be expressed by return on sales or return on investment
3. Setting prices based on assessment of demand. 3.1. Ratio Analysis Method elasticity.	The price of a product is determined based on the demand for the product. The price level for a product depends on changes in demand. A high price is set when demand is relatively high, and a low price when demand is low. In this approach, costs are considered only as a limiting factor that shows whether a product can be sold at a set price, providing a profit, or not.
4. Setting prices based on use value. 4.1. Method of direct price determination. 4.2. Method for determining use value. 4.3. Diagnostic method.	When setting prices, they are guided by an assessment of the purchasing use value of the product. Consumer ratings are usually expressed in points or percentages. Costs are considered as an auxiliary indicator taken into account when ensuring a positive economic result. The approach is used when introducing a new product to the market.
5. Pricing based on prices competitors. 5.1. Technical analysis method level of competitor products.	The approach is based on competitors' prices. Little attention is paid to own costs and demand. When setting prices first The quality of the goods is taken into account.
6. Setting prices based on a parametric series of products. 6.1. Method of specific indicators. 6.2. Method of structural analogy. 6.3. Correlation method regression analysis	The basis of the approach is the quantitative relationships between costs or prices and consumer properties of products included in the parametric series. A parametric series is a group of products that are homogeneous in design and manufacturing technology and have the same functional purpose.

When deciding on prices when setting pricing objectives, the determining factors are:
– costs of production and sales of products;
– the maximum price that the consumer is willing to pay;
– price level for competing goods, influence of competitors.

Based on this, three main pricing strategies can be distinguished:
– setting low prices (costs plus normal profit);
– strategy of exhaustion (“skimming off the cream”);
– strategy of adaptation to the market price (following the leader).

The company sets an initial price and then adjusts it based on environmental factors.

Within the framework of the pricing policy, the following pricing areas can be distinguished:
– setting prices for new goods;
– pricing within the product range;
– setting prices with discounts and offsets;
– setting prices to stimulate sales;
– establishment of discriminatory prices.

(see Fig. 2.4)

To make investment decisions, information is needed about supply and demand, production costs, availability of resources, etc. The effect of the decision will manifest itself only after a certain time, so investing in a particular project requires a cost assessment taking into account the risk factor. We also need information about tax prospects, expected inflation rates...

All this information is not acquired or produced for free. The economic effect of using information must exceed the costs of acquiring it - this is the general criterion that determines the feasibility of obtaining any information. There is such a volume of information at which the benefits from its use are maximum. After passing the point of the optimal amount of information, the benefits from obtaining additional, now excessive information compared to the additional costs of acquiring it begin to fall - this is manifested in the law of diminishing marginal utility and marginal productivity of factors of production.

The most important is the following formulation of the law of diminishing marginal utility and marginal productivity of factors of production: An increase in variable costs leads to an increase in the volume of output, sales revenue and profit only up to a certain point, beyond which additional products and the economic effect obtained from a further increase in costs begin decline. This happens because more and more new “doses” of variable costs are combined with relatively decreasing values ​​of fixed costs, the rational combination between variable and fixed costs is violated, and the enterprise cannot further increase revenue and profit due to a lack of equipment, production and office space , management personnel, insufficient advertising, etc. To correct the situation, a jump in fixed costs is required.

Let us return, however, to the problems of obtaining information. To make investment and financial decisions, an enterprise first needs information about the demand for its product. You can verify the effectiveness of this information by comparing various options for estimated additional revenue from increasing production and sales with additional marketing costs - studying the market and promoting the product on it. The most important tools of marketing research are product demand and supply curves.

The optimal option is equality of supply and demand. The equilibrium point between supply and demand corresponds to the equilibrium price. This price is called the equilibrium price (EP):

• - the equilibrium price rationalizes the buyer’s demand, conveying to him information about what volume of consumption of a given product he can count on;
• - the equilibrium price tells the manufacturer (seller) what quantity of goods should be produced and delivered to the market;
• - the equilibrium price carries all the information necessary for producers and consumers: a change in the equilibrium price is a signal for them to increase (decrease) production (consumption), an incentive to search for new technologies.

Thus, the equilibrium price quite successfully serves to automatically regulate production.

The upward shift of the demand curve is influenced by changes in consumer behavior in anticipation of rising prices - the factor of inflation expectations. Let us note other factors that influence the height of the demand curve: changes in the population, changes in tastes and preferences, political and natural shocks, etc.

What guides a particular buyer in his behavior? In answering this question, the theory of marginalism is based on the following basic principles:

• 1. The consumer strives to obtain the greatest, from his point of view, satisfaction with his limited income - maximum subjective utility.
• 2. The subjective utility that each subsequent purchased unit of a given product brings to the consumer is less than the subjective utility brought by each previous unit of the product. At the same time, the total, total utility increases more and more slowly. The increase in total subjective utility when consuming each new unit of a good is called marginal utility.

Utility is expressed and confirmed by the buyer through the purchase of a product at a given price. Indeed, by agreeing to pay for a product, the buyer recognizes it as subjectively useful for himself personally. Thus, the marginal utility curve usually coincides with the demand curve.

When we consume the first “portion” of any product, we usually receive maximum satisfaction. But as we consume more and more “portions” of the same product, our need for this product becomes saturated, and the psychological ability to assess its usefulness becomes dulled, that is, the overall (total) utility of consuming the product grows for you at an increasingly slower rate. pace.

The marginal utility curve coincides with the demand curve... when the utility of the monetary unit (!) is constant! In conditions of inflationary price growth, the usefulness of the monetary unit, unfortunately, decreases, so your curves will coincide and will be practically applicable only if you make all calculations in comparable prices - either in current or in prices of the base period. Otherwise, you will receive distorted information on the basis of which you cannot make decisions.

The requirement to use comparable prices applies to all financial management calculations.

Now let's see what the desires and behavior of the seller (manufacturer) depend on?

The manufacturer strives to maximize the profit received, i.e. the difference between revenue from sales of products and the costs of their production. This means that when deciding on production volume, the manufacturer must always choose the volume that provides the greatest profit. We thus come close to variant calculations of profit at different prices and production volumes. It is obvious that each subsequent unit of production produced will require an increase in costs. In other words, the production of an additional unit of output causes an increase in total revenue by a certain amount, which is called marginal revenue, and a simultaneous increase in total costs by an amount, which is called marginal cost.

If the production of an additional unit of output adds more to total revenue than is added by the production of this unit of output to total costs, that is, marginal revenue is greater than marginal cost, then the manufacturer's profit increases. Conversely, if marginal revenue is less than marginal cost, profit decreases. The greatest profit can be obtained in the case of equality or at least maximum convergence of marginal revenue with marginal costs. It is this equality that determines the equilibrium price and optimal production volume, ensuring maximum profit.

Let us further imagine a situation that is well known to everyone: the manufacturer raises the price. How sharply will the volume of demand change, and will it change at all? To answer this question it is necessary to use the elasticity apparatus.

Elasticity shows the degree to which one quantity responds to a change in another, for example, a change in the quantity demanded due to a change in price. This reaction can be strong or weak, and our demand and supply curves will change accordingly.

The first case is when the slightest increase in price causes a sharp drop in demand. The consumer is sensitive to price changes. The second case is during rush demand, as well as in the market for essential goods), even a significant increase in price causes only a slight decrease in demand.

It follows from this that in the first option, the price increase has a painful impact on the financial position of the manufacturing enterprise, since effective demand (and with it sales revenue) drops sharply; in the second option, on the contrary, the financial position of the enterprise improves, because demand practically does not change, and prices and revenues rise.

To decide whether or not a manufacturer should raise prices in each specific case, the elasticity mechanism is used:

• - when the elasticity of demand is greater than one (demand is elastic), a decrease in price causes such an increase in the quantity of demand that total revenue increases;
• - if the elasticity of demand is equal to one, the decrease in price is exactly compensated by the corresponding increase in sales, so that total revenue remains unchanged;
• - when the elasticity of demand is less (demand is inelastic), a decrease in price causes such a fall in demand that total revenue falls.

Thus, with demand elasticity less than one, the manufacturer can increase prices for its products and increase revenue. But if the elasticity turns out to be greater than one, it is better not to increase prices, because sales revenue will begin to decline. In this case, on the contrary, it makes more sense to lower prices in order to increase revenue due to increased demand. The types of buyer reactions to price changes are shown in Table 2.1.

Table 2.1 - Buyer behavior for various types of demand

Manufacturers should always remember that:

• - the more goods on the market that are, from the buyer’s point of view, substitutes for your product, the more elastic the demand. If, for example, you raise the price of a certain brand of radio equipment, a significant number of buyers may switch to cheaper substitutes;
• - the higher the share of expenses for a given product in the consumer’s budget, the higher the elasticity of demand. If only a small part of the consumer budget is spent on your product, then the buyer does not need to change his habits and preferences when the price changes. The same amount of spending on a purchase with a high income is a small share of the budget, and with a low income it is a significant one. Therefore, the elasticity of demand for the same good is less for low-income consumers than for low-income consumers;
• - the elasticity of demand is lowest for goods that, from the consumer’s point of view, are the most necessary. The elasticity of demand is especially low for goods whose consumption cannot be postponed. At the same time, the buyer becomes more accommodating.

For a manufacturer (seller) of a product, interest in the elasticity of demand is by no means idle, because any manufacturer can act both as a supplier and as a consumer of raw materials, semi-finished products, energy, various products, equipment, and services. How do the total costs of the consumer enterprise change when prices for all these goods change? What prospects for profit dynamics can we count on? First of all, determine the nature of your demand for raw materials, etc., and then refer to Table 2.2 and do not forget, please, about the share of certain of your costs in their total amount.

Table 2.2 - Changes in consumer costs when prices for raw materials, materials, energy, equipment, etc. change

If, in response to an increase in prices for energy, raw materials, supplies, etc., you can significantly reduce their purchases due, for example, to a change in technology, then your demand for these goods is elastic; if your consumption does not change, then demand is characterized by unit elasticity; If, with rising prices, the technology cannot be made material- and energy-saving, then an increase in costs is inevitable, which is what we observe under the conditions of a manufacturer’s monopoly. I would like to hope that the development of entrepreneurship, the diversity of business forms, and increased competition will force our producers to respond to rising prices for raw materials and materials by changing technologies.

The elasticity apparatus can also be applied to the analysis of the price consequences of tax changes. Most often, a change in taxes causes a change in demand.

When demand is elastic (that is, prices cannot be raised sharply for fear of a sharp drop in revenue), the producer bears the brunt of the tax increase.

If the tax is reduced, then in conditions of elastic demand it is more profitable for an entrepreneur to reduce the price, because this will cause an increase in demand and revenue will increase.

But if demand is inelastic, that is, an increase in price does not cause a sharp change in demand, there are three options for an entrepreneur’s behavior when reducing tax pressure:

• 1. Reduce prices. Demand will not rise sharply due to inelasticity; increasing sales revenue is very problematic. However, in our conditions, the very fact of a price reduction can become an excellent advertisement and sharply stimulate demand.
• 2. Leave prices the same. This is perhaps the most acceptable option, since a tax reduction is equivalent (for a given demand) to an increase in the share of sales proceeds going to the manufacturer.
• 3. Raise prices. If handled very carefully and well analyzed, this can provide the greatest increase in revenue as the price increases while tax is reduced. It’s just important not to go overboard with the price. Otherwise, as has already been shown, demand falls catastrophically, and the enterprise earns itself bad publicity.

The development of pricing policy and strategy of the enterprise is carried out in three stages:

collection of background information;

strategic analysis;

strategy formation.

When implementing these stages of developing the pricing policy and strategy of the enterprise, the following activities are carried out:

assessment of production and marketing costs;

clarification of the financial goals of the enterprise;

identification of potential buyers;

clarification of the enterprise's marketing strategy;

identifying potential competitors for the company’s products;

financial analysis of the enterprise;

segment market analysis;

analysis of the enterprise's competition in a specific market;

assessing the impact of government regulation measures on pricing issues;

determining the final pricing strategy.

Main elements and stages of developing pricing policy and strategy, the main activities and the relationships between them can be presented as follows:

1) cost estimation;

2) clarifying the financial goals of the enterprise;

3) identification of potential buyers;

4) clarification of the marketing strategy;

5) identification of potential competitors;

6) financial analysis;

7) segment market analysis;

8) competition analysis;

9 assessment of the impact of government regulation;

10) final pricing strategy.

The first stage work is to collect initial information for developing the pricing policy and strategy of the enterprise, and the main activities during this stage of work are the following:

1) cost estimation. When assessing the costs of production and sales of products, the main attention should be paid to identifying all those costs that are actually associated with the production and sales of these products, as well as identifying and analyzing those cost items, the value of which may change when the volume of output (sales) of products changes as a result price changes;

2) clarification of the financial goals of the enterprise. The pricing strategy must correspond to the main financial goals of the enterprise adopted for the near future and future.

In accordance with the financial plan of the enterprise, the minimum level of profitability required for the sale of each type of product is determined, as well as the priority of the task - obtaining the largest amount of profit or obtaining profit within a certain period of time to repay debts on previously raised borrowed funds (including non-payments to budgets of all levels, extra-budgetary funds, employees and suppliers);

3) determining the list of potential competitors. When carrying out this activity, it is necessary to identify existing and potential competitors, whose activities can most affect the profitability of sales of the enterprise’s products and establish the level of contract prices for products produced by existing competitors, and assess how much these prices differ from the prices of real transactions, including through various types of discounts and special sales conditions.

Based on available information about competing enterprises, their activities in the past, the personal characteristics of their managers, organizational structure, development plans, etc., determine the main goal in the field of pricing and analyze the advantages and disadvantages available in the production and marketing of competitors' products , for example, in terms of reputation among customers, product quality, assortment, etc.

The second stage of the process developing a pricing strategy strategy is a strategic analysis. During its implementation, previously collected information is subjected to appropriate analysis:

1) the financial analysis . Financial analysis is based on information about:

possible price options;

the product and the costs of its production;

the possible choice of that market segment in which the enterprise can win over customers by more fully satisfying their requirements, or for other reasons it has a preferable chance of creating sustainable competitive advantages.

Financial analysis will allow the company to determine the most preferred and profitable sector of the market, either through additional costs to meet the requirements of buyers of products of a high level and quality than competitors, or by improving the organization and production technology aimed at meeting the requirements of buyers of products of the same level of quality as and from competitors, but at lower costs.

In this case, it is necessary to calculate the amount of net profit from the production (sales) of a unit of each type of product at the existing price, the amount of growth in sales volume of each type of product in the event of a decrease in its price and subject to an increase in the total amount of net profit of the enterprise, as well as the maximum reduction in the volume of sales of the enterprise’s products in the event of an increase in its price, in which the total amount of net profit of the enterprise falls to the existing level;

2) segment market analysis , during which it is necessary to determine how to most profitably differentiate prices for products manufactured by the enterprise in order to take into account as much as possible the differences between market segments in the sensitivity of buyers to the level of product prices and in the level of costs of the enterprise in order to most adequately meet the requirements of buyers from different segments.

For these purposes, it is necessary to determine in advance the composition of buyers in various market segments and determine the boundaries between individual segments so that the establishment of lower prices by an enterprise for its products in one of the segments does not interfere with the establishment of higher prices in other segments. It is also necessary to differentiate prices by market segments, having previously analyzed compliance with the requirements of the current legislation on pricing issues;

3) competition analysis . The purpose of such an analysis is to assess (predict) the possible attitude of competitors to the planned changes in product prices and the specific measures that they can take in response.

On this basis, it is necessary to try to determine the impact of competitors' responses on the level of profitability and the effectiveness of the pricing strategy that the company intends to implement in the market. It is advisable to determine the level of sales and profitability of each type of product that the enterprise can realistically achieve, taking into account the possible reaction of competitors, to find measures to influence competitors in order to achieve the results of its pricing strategy and reduce losses from competition. In addition, it is necessary to determine the enterprise’s ability to increase the guarantee of achieving its goals in terms of volume and profitability of product sales by focusing efforts on those target market segments where it is easier for it to achieve a sustainable competitive advantage, as well as to identify those market segments in which it is strategically rational to stop spending resources (for example, refuse to produce products intended for these market segments).

Third stage development of pricing policy and strategy is the choice of the final pricing strategy, which is part of the overall development strategy of the enterprise.

To develop and successfully implement an enterprise’s pricing policy, it is recommended to have a permanent structural unit responsible for pricing issues for the enterprise’s products. The activities of this unit are carried out under the direct control of the head of the structural unit of the enterprise, which is responsible for marketing or sales of the enterprise's products, and may be part of either this unit or the economic planning unit.

It is advisable to carry out work on pricing issues together with the structural divisions of the enterprise responsible for assessing and forecasting the cost of production under various options for the pricing policy and the corresponding production and sales policy, for justifying the financial indicators that the pricing policy should be aimed at, as well as for developing financial aspects of the implementation of such a policy (for example, determining limits for financing advertising activities), as well as with structural divisions responsible for collecting information on current market conditions, determining the real structure (segmentation) of the market for the company’s products, forecasting sales volumes possible at different price levels for products, assessment of possible actions of competitors under certain pricing policy options, justification of opportunities to increase sales and improve its financial performance without changing prices and with departments responsible for conducting advertising campaigns, building a brand image and disseminating information that allows influencing the commercial decisions of competitors .

Pricing policy is a price formation process that ensures the achievement of the following goals: profit maximization; consolidating market positions and penetrating new segments; creating a company's business reputation.

There are several stages for developing a pricing policy:

At the first stage, you should decide on the purpose of your pricing policy. This goal may contain a broad area of ​​business development or small prospects for the enterprise to reach a new level of sales.

The second stage is characterized by internal marketing research. As part of this analysis, an assessment is made of the production capacity of the equipment, labor costs, the cost of raw materials and supplies, the costs of transporting goods and the search for new distribution channels, the costs of marketing activities that stimulate sales, etc.

At the third stage, marketing research is carried out on the pricing strategies of competitors, namely, price levels for analogue products, price variations depending on changes in market factors and consumer preferences, flexibility of pricing policies and features of the choice of pricing strategies.

The fourth stage is determined by making a decision on what method will be used to determine the retail price of your own goods. The main criterion when choosing a pricing approach is to obtain the maximum possible profit.

At the fifth stage, programs are developed to adapt prices to constantly changing market conditions. At this stage, factors influencing consumer demand are analyzed, as a result of which the price needs to be adjusted. These factors include:

rising production costs and wages;

the need to increase production capacity and attract additional labor;

general state of the economy, trends towards a crisis;

product quality level;

a set of functional characteristics of the product;

availability of analogues on the market;

the prestige of the brand under which the product is promoted;

income level of potential consumers;

product life cycle stage;

dynamics of demand development;

type of market.

These factors can be combined with each other and supplemented by other conditions. The main difficulty of this stage is that most of these factors cannot be measured quantitatively.

The sixth stage is the final one, as it completes the price formation process with the final monetary expression of the value of the product.

The result of the pricing policy is the price, the adequacy and correctness of which must be judged by the consumer. When forming an opinion about the price, the buyer analyzes only the optimal relationship between the consumer value of the product and its monetary value.

Before using one or another pricing policy, one cannot ignore the general retail price level in its daily dynamics. This information can be obtained from statistical directories, catalogs of other enterprises and other sources.

Pricing strategies are the practical application of pricing policy and represent decision-making regarding the introduction of the best price to the market, aimed at achieving the highest level of demand in conjunction with maximum profit. Pricing strategies are developed within the forecast period of time and have several modifications. Existing pricing strategies can be characterized by the following tasks:

penetration into a specific market segment;

consolidation of existing positions;

maintaining demand;

extending the product life cycle;

obtaining the maximum possible profit;

creating competitive advantages;

development of intended market niches;

formation of consumer demand;

return on production costs;

sales promotion, etc.

Types of Pricing Strategies

To solve these problems, the following pricing strategies are used:

“Skimming” strategy.

This strategy is applicable mainly to a new product that has no analogues on the market. This product creates a unique need, which can only be satisfied by its unique properties and features. The retail price for such goods is set significantly higher than the cost price with the expectation of obtaining maximum profit at the first stage of the product life cycle. Later, the price gradually decreases, allowing each category of buyers to purchase a new product, paying for it as much as their financial capabilities allow. The successful implementation of the proposed strategy depends on the level of demand and consumer awareness of the benefits that he will receive after purchasing the product.

Market penetration strategy.

This strategy is mainly used by firms that have recently entered the market. The essence of the strategy is to set the lowest possible prices for goods of own production. This approach often leads to some losses and leaves the company without profit. The main goal of this strategy is to attract the attention of consumers to the products of this organization and acquire loyal customers.

Differentiated pricing strategy.

This strategy involves the development of heterogeneous prices for various localities and places of sale of goods. This approach may be due to different amounts of costs that the company incurs when delivering goods to one point or another. Prices developed within the framework of this strategy are proposed to be used in combination with incentive discounts and promotions.

Preferential pricing strategy.

This strategy offers the same product to different categories of consumers at heterogeneous prices. With this approach, one should take into account the level of income and the degree of importance of a group of representatives of a particular target audience for the enterprise.

Psychological strategy.

This strategy implies that the price of the product is not rounded to a whole value, but leaves a few kopecks after the decimal point. This approach allows the consumer to expect change, and also to think that this price was the result of careful calculations.

Wholesale pricing strategy.

This strategy involves reducing prices to encourage one-time purchases of large quantities of goods.

Elastic price strategy.

This strategy takes into account only the purchasing financial capabilities and characteristics of consumer preferences, on the basis of which the price is formed.

Prestige pricing strategy.

This strategy involves setting high prices for goods that have a special level of quality.

An example of pricing strategy formation

As a practical example, let us consider the process of forming a pricing policy at company “A”.

Company “A” is an intermediary between the developer of software products on the 1C platform and their end user. Since prices for software are determined by the manufacturer, the development of a pricing policy is carried out in terms of determining the cost of contracts for technical support of software products. The process of creating a pricing policy at company “A” can be represented in the following stages:

Determining the goals of the pricing policy.

Taking into account the fact that the demand for service maintenance of software products is growing, and the labor and time resources at company “A” are not enough to satisfy the entire volume of consumer needs, the goal of the pricing policy will be formulated as follows: finding the optimal price for a comprehensive service agreement , ensuring the planned rate of profit and restraining rush demand.

Marketing research of internal production capabilities.

2. Organization of a marketing service

The formation of marketing in an enterprise involves the following stages:

building (improving) the organizational structure of marketing management;

selection of marketing specialists (marketers) with appropriate qualifications;

distribution of tasks, rights and responsibilities in the marketing management system; creating conditions for the effective work of marketing service employees (organizing their workplaces, providing the necessary information, office equipment, etc.);

organizing effective interaction of marketing services with other services of the organization.

It should be noted that the formation of a marketing service at an enterprise is not a formal allocation of a special unit, but, first of all, a market reorientation in its activities, a transition from a traditional orientation to production requirements to an orientation to market requirements.

The organizational structure of the marketing service in an enterprise can be defined as the structure of the organization on the basis of which marketing management is carried out, in other words, it is a set of services, departments, divisions, which include employees engaged in one or another marketing activity. This structure is critical to the successful implementation of the marketing concept.

The choice of the organizational structure of an enterprise division (including the marketing service) depends on many factors. The most important are the following:

type of organization (enterprise) in which the unit is created;

the type of strategy followed by the enterprise;

the level of the existing designed division of labor in the department (service);

type of departmentalization of main functions and works;

the presence and development of technological and functional connections with related divisions of the enterprise;

presence of connections with the external environment;

existing standards of management and control;

level occupied in the management hierarchy;

degree of centralization and decentralization in decision making;

the necessary level of differentiation and integration of this unit in the process of its interaction with related departments (groups) of the enterprise.

Designing organizational structures of marketing (marketing services) is the activity of developing and integrating such structures into the enterprise activity management system.

The organizational structures of marketing services must meet certain requirements, the main ones of which are:

a small number of links (the fewer links, the faster information is transmitted from bottom to top and the director’s orders from top to bottom);

simplicity of the marketing structure (facilitates easier adaptation of personnel to the enterprise);

unity of purpose;

the principle of single subordination (there must be one leader);

creating conditions for the development of integrated marketing at the enterprise; assisting the company in constantly meeting the needs of existing and potential customers;

ensuring the development of creativity and innovative activities of employees; guarantee of rapid adaptation of manufactured products to market requirements; promoting sales growth and cost reduction.

Any marketing management organizational structure can be built on the following principles:

functional,

geographical,

grocery,

market,

mixed, which suggests its corresponding types:

Functional organization is built on the principle of responsibility of an individual or group of persons in a department for the implementation of a separate local or consolidated functional task of the department (marketing research, sales, advertising, etc.). Depending on the status of marketing services at the enterprise, they can be headed by a director, deputy director, head of the marketing department, head of the marketing group, and other administrative person. The functional organization is shown in Fig. 8.2.

From a marketing perspective, sales is one of its functions, and the sales division may be part of the marketing service. However, in practice, the sales division, as a rule, is not included in the structure of marketing services, but forms an independent branch in the organizational structure of the enterprise management. This emphasizes the special importance of product sales and the dependence of the financial and economic situation of the enterprise on the efficiency of sales services. At the same time, sales employees often, in contact with intermediaries and consumers, also perform purely marketing functions, for example, collecting information about consumers’ attitudes towards the company’s products. Despite this, marketers are primarily engaged in operational rather than analytical work.

In addition to solving specific marketing problems, important tasks of functional marketing services are to ensure that all enterprise activities are oriented towards the use of marketing principles, and to coordinate the work of all departments and services of the enterprise in this direction.

The functional organization of marketing services is the easiest to manage: each performer has a range of responsibilities that does not overlap with others. The emergence of competition between individual functional areas will contribute to an increase in work efficiency on the one hand, and the struggle for private interests, and not for the general interest of the company, on the other hand. The effectiveness of functional marketing services decreases as the range of manufactured products grows and the number of sales markets expands.

This form of building a marketing service is practiced by small firms that produce one or a limited number of products and sell products in a small market (in a market segment). However, large manufacturers of unique equipment also use this form.

The functional organization of the marketing service is very effective when the production and sales functions of the enterprise are uniform and constant, but when the types of activities change or when solving fundamentally new problems, a quick reaction to a changing market situation, it is less effective.

Geographical organization is an organizational structure of marketing management in which marketing specialists, primarily marketers, are grouped into separate geographic areas. This organization allows marketers to live within the service territory, know their consumers well and work effectively with minimal time and money spent on travel. The geographical organization is shown in Fig. 8.3.

The product (commodity) organization of the marketing department is built on the principle of dividing marketing into separate enlarged product groups. In a commodity organization, each product (product group) has its own manager, who is subordinate to employees who perform all the marketing functions necessary for a given product. The advantage of a product organization is that the manager for a specific product coordinates the entire marketing complex for this product and responds more quickly to emerging problems in the market.

This form of construction is used mainly in large enterprises, because it is relatively expensive. The organization according to the product principle is shown in Fig. 8.4.

This type of marketing service is effective for companies that have a wide range of products with the possibility of selling them in a large number of homogeneous (identical) markets. Product structure is especially effective when:

b) the sales volume for each product is large enough to justify the costs of organizing a marketing service for this product.

A fairly large disadvantage of a commodity organization is associated with the need for each department employee to perform a large set of responsibilities for assigned functions (development of a product strategy, product distribution scheme, sales, sales promotion, advertising, etc.).

A market organization is a marketing management organizational structure in which managers of individual markets are responsible for developing and implementing strategy and plans for marketing activities in specific markets. Depending on the meaning given to the concept of “market,” the organizational structure can include divisions focused either on specific consumers or on specific industries (the market for engineering, construction, and other enterprises).

Disadvantages of a market organization: complex structure, low degree of specialization of the work of service departments, the possibility of duplication of functions (for a segment organization), poor knowledge of the product (the entire product range).

Advantages of a market organization: better coordination of services when entering the market, the ability to develop a comprehensive market entry program, a more reliable market forecast taking into account its specifics.

In their pure form, product and market organizational structures for marketing management are not used. More often, combinations of these organizational principles are used, namely: functional-product (product), functional-market (regional), product-market (regional) and functional-product-market (regional) marketing management structures.

Therefore, there are many options for forming a marketing service at an enterprise, each of which has its own advantages and disadvantages. When choosing one option or another, you should remember two basic rules. The first rule is that the structure of the marketing service should be as simple as possible; the simpler the structure, other things being equal, the more mobile its management and the higher the chances of success. Rule two - the number of functions for which responsibility can be assigned to one specialist is limited. The more goods he is in charge of, the fewer the number of functions he is able to handle, and vice versa.

A) Using the drawing panel to develop graphic objects.

points) Place the stages of protein biosynthesis in the correct sequence. Write the answer as a combination of numbers, without spaces or any punctuation marks, for example 143569278

Ticket 12. Prerequisites, features and main stages of the formation of the Russian centralized state.

When starting to develop its own pricing policy, an enterprise needs to take into account the type of market, its volume, structure and degree of saturation, determine the elasticity of demand, i.e. the rate of change in demand under the influence of various factors, such as price.

In pricing policy, it is necessary to implement two essentially opposite approaches. On the one hand, to give, if possible, significant freedom to the manufacturer, including in matters of pricing, in order to overcome shortages and stabilize the economy. On the other hand, limit the noticeably manifested tendency towards rapid price increases in order not to aggravate social and political conflicts, slow down inflation, protect consumers, and prevent the impoverishment of large sections of society.

In the world practice of pricing, in the absence of competition for any type of product, two options for setting prices are possible. In the case of a regulated monopoly, the government allows the company to set prices that provide a “fair rate of return” that allows the organization to maintain production and, if necessary, expand it. In the case of an unregulated monopoly, the firm itself is free to set any price that the market will bear.

Thus, an enterprise cannot have complete freedom in matters of pricing; its desire is adjusted by many factors, which, firstly, are formed under the influence of the general state of the economy (employment, real income, dynamics of investment industries, the state of the financial system) and require regulation by states; secondly, they are related to the components of the market (demand, supply, inflation, balance) and have a direct or indirect impact on the pricing policy of each individual enterprise.

The development of an enterprise's pricing policy begins with defining goals.

Next, you need to evaluate the capabilities of the consumer. It must be taken into account that markets for consumer goods and services are interconnected; since they rely on the income of the population and are formed within the framework of existing effective demand. An increase in demand in one sector of the consumer market can lead to a decrease in another. Rising prices in the national economy as a whole and a decline in real incomes have a negative impact on the purchasing power of the population. Inflation causes a change in the structure of effective demand and leads to a switch in demand for essential items. On the other hand, income differentiation, inevitable during the transition to a market, can increase the demand for more expensive and high-quality services.

Cost estimation is the next stage of pricing. Costs characterize the capabilities of an enterprise and its competitiveness.

The next step in the pricing process is choosing a pricing method. There are several basic pricing methods known to market practice.

Method average cost plus profit consists in charging a certain markup on the cost of goods. The size of the markups is set depending on the type of goods and varies widely. This method does not take into account the characteristics of current demand and competition, and therefore does not allow setting the optimal price of the product. The method is used when sellers know more about costs than about demand, and they do not have to frequently adjust prices depending on fluctuations in demand. Firms in an industry use this method when their prices are similar, so price competition is minimized. The method is fairer to buyers, since when demand is high, sellers do not profit at the expense of buyers.

Price calculation based on the break-even principle involves taking as a basis the costs of production and marketing of goods and adding the desired profit to them. This pricing method requires the firm to consider different price options to determine their impact on sales.

If, when setting a price, a higher desired profit is assumed, it is necessary to take into account a number of factors limiting its value, which lie on the side of consumers:

general dynamics of real incomes of the population of the region as a whole, as well as by social and age groups;

general dynamics of prices for consumer goods and services;

changes in the structure of consumer demand;

the likelihood of consumer demand switching in conditions of inflation to satisfy more pressing needs;

the degree of urgency of needs for certain types and their place in the range of consumer preferences.

In order to fit within the acceptable level of costs, it is necessary to constantly take into account changes in the contractual and free prices of the supplier for both material and equipment, and create a generally flexible adaptation mechanism that can quickly respond to constantly changing economic conditions.

Price setting method based on the buyer's perceived value of the product applies if the buyer is offered a product or service of special quality, or if there is an increased level of service. For example, individual tailoring according to the artist’s sketches; the order is completed in a shorter time.

Price setting based on current price levels quite popular and involves taking into account the prices of other producers of similar goods and services. Smaller firms, following the leader, change prices only when the leader changes them, and not depending on fluctuations in demand for their goods.

When setting prices for based on sealed bidding A firm's bid for a contract is based on its competitors' expected price quotes.

If the volume of services in physical terms falls as a result of rising prices, it is necessary to switch to a pricing methodology based on demand. Unlike prices focused on production costs, these prices are based on constant monitoring of the intensity of demand and flexible changes in the level of the set price. In a simplified form, this method looks like this: when demand increases, prices are set at a higher level, and when demand falls, prices are set at a lower level. In both cases, the marginal cost of production per unit of goods remains the same, and the rate of profit changes. Setting prices depending on the actual demand for a product leads to price discrimination, meaning that the same product is sold at two or more prices depending on buyer behavior, product variant, place or time of sale. Demand should be studied in several directions: its structure by nomenclature; dynamics by season and year; real, potential and future demand; elasticity of demand, i.e. the rate of its change under the influence of various factors. When setting the final price of a product, the company's management must take into account the reaction of other market participants: the state, competitors, suppliers.

The pursuit of current profits can push a company to unjustifiably sharp price increases, especially in the absence of competition. However, although too high a price contributes to the growth of current profits, it poses a certain danger in strategic terms. Firstly, it attracts additional capital and entrepreneurs to this area, and therefore creates or increases competition and ultimately leads to lower prices and profits. Secondly, it necessitates the introduction of administrative price regulation in order to protect the interests of the population (consumers). Thirdly, it scares away potential consumers and thereby narrows the scope of the enterprise’s economic activity and reduces the market, for example, dry cleaning services. Consumers cannot get more out of what they can give, so when prices rise, some consumers pay more, but others switch off altogether. The volume of services not only does not grow, but may even decline.

Thus, at a low price, making a profit is impossible. At a high price, it becomes impossible to generate demand.

In market conditions, an enterprise should be very careful with prices, special attention must be paid to creating demand for its goods and services, looking for its consumer, striving to increase the number of customers by expanding the range of its goods and services.

In general, it is necessary to develop a long-term policy of actively influencing prices and market demand, forming them in order to maximize profits and taking into account the interests of regular and additionally attracted consumers.

Control questions

Describe the main factors influencing the pricing process.

What place does price occupy in the marketing mix?

List the main objectives of pricing.

Expand the pricing method, which is based on the study of demand.

In what cases can an enterprise be guided by competitors' prices when setting prices?

How does the firm manage prices?

How is consumer attitude towards prices measured?

Exercises

For the most important terms, choose the correct definition:

Price policy.

Price elasticity.

Functional discounts.

Zone prices.

Setting prices based on current price levels.

a) Pricing that uses competitors' prices rather than its own costs as the basis for calculations.

b) Setting prices on a geographical basis.

c) A measure of the sensitivity of demand to price changes.

d) A discount offered by the manufacturer to distribution services performing certain functions in the distribution channel.

e) A set of strategies and activities to manage prices and pricing.

Test

1. Market penetration prices are:

a) higher prices in relation to the prices of competitors;

b) lower prices in relation to the prices of competitors;

c) identical goods are sold at different prices;

d) maintaining constant prices over a long period.

2. PriceEXW- This:

a) the seller sells the goods at the disposal of the buyer on his own territory;

b) the seller pays transport costs;

c) the seller pays insurance costs;

d) the seller pays transportation costs to the port of destination.

3. Tests are:

a) discounts from current prices;

b) discounts provided in distribution channels;

c) discounts for the quantity of goods purchased;

d) discounts on new goods subject to the return of old goods.

4. PriceF.A.S.characterized by the fact that:

a) the seller pays transportation costs until the goods are loaded;

b) the seller delivers the goods on his territory;

c) the seller pays all transportation costs;

d) Buyer pays all shipping costs.

5. Bonus discounts are provided:

a) for the quantity of goods purchased;

b) for payment in cash;

c) regular customers;

d) resellers.