UGC NET COMMERCE December 2018 Q4
0. Which among the following is not an internal factor of pricing decision?
- Option : C
- Explanation : FACTORS INFLUENCING THE PRICING DECISIONS OF SERVICES
Internal and External Factors
The factors that influence price determination can be classified as internal and external factors (Adrein Palmer).
1. Internal Factors
The internal factors are controllable in nature, which are discussed below:
(a) Organisational Policies: As price decision is an outcome of production and marketing, the pricing (takes at the top level and the lower level of an organisation.)
(b) Service Differentiation: In order to differentiate own services from that of the competitor, the service provider has to price the services differently.
(c) Service Cost: It is necessary to assure that the price charged for a service covers the fixed, variable and semi-variable costs incurred in providing that service.
(d) Marketing Mix: The price of a product or service varies depending upon whether the product or service idea is new or an established one, whether the service provider is an agent or a sub-agent, or the main provider (distribution channels) and also the various pricing objectives.
2. External Factors
On the other hand external factors are uncontrollable in nature, such as:
(a) Demand: Markets have to be segmented effectively according to:
Different Groups of Users: In order to obtain maximum value from each segment of users, different prices can be charged for offering the same service. Depending on the user’s demand for the product or service like heavy user, medium user, on low user the pricing variations are made.
Different Points of Consumption: On the basis of the point of production and consumption, service organisations charge different prices at different service locations. Depending on the place where the consumption takes place, the prices are to be varied. For example, Taj group of hotels will not charge the same price for its deluxe rooms in Delhi, Mumbai, Chennai and Bangalore.
Different Time of Production: Owing to the perishability characteristic of the services, they are priced discriminatorily, depending upon the time at which they are offered. For example, hotels in Goa follow a different price package during the monsoon season as compared to the peak season of the year i.e., October-May.
(b) Competition: Competition plays a significant role in pricing, due to similarity in the services offered and the satisfaction enjoyed by a customer. Unless the products and services provided by the hotelier are unique in nature, the marketer cannot price the products and services higher than the competitor.
(c) Governmental Control: Government policy regulations affect the pricing decisions of various services. For example, changes in the luxury tax, sales tax, etc. imposed by the government, from time to time, affect the pricing decisions of a hotel or restaurant business.
