Briefly describe the different types of pricing objectives

What will be an ideal response?

When a company is preparing to sets its price, it first has to select its pricing objectives. The five major objectives available to a company are:
1. Survival — Companies pursue survival as their major objective if they are plagued with overcapacity, intense competition, or changing consumer wants. As long as prices cover variable costs and some fixed costs, the company stays in business.
2. Maximum current profit — Companies who try to maximize their current profit, estimate the demand and costs associated with alternative prices and choose the price that produces maximum current profit, cash flow, or rate of return on investment. This strategy assumes the firm knows its demand and cost functions, but in reality, these are difficult to estimate.
3. Maximum market share — Companies that want to maximize their market share believe that a higher sales volume will lead to lower unit costs and higher long-run profit. They set the lowest price, assuming the market is price sensitive. This is a market-penetration pricing strategy.
4. Maximum market skimming — Companies unveiling a new technology favor setting high prices to maximize market skimming. Companies that use this, introduce their products at a high price and slowly drop the price over time.
5. Product-quality leadership — Companies that aim to be product quality leaders strive to be affordable luxuries, i.e., they want their products and services to be characterized by high levels of perceived quality, taste, and status with a price just high enough not to be out of the consumer's reach.