An analisys of Management Accounting Essay Example | Topics and Well Written Essays - 3250 words

An analisys of Management Accounting - Essay Example This research aims to evaluate and present the models and concepts affecting the pricing decisions taken by organizations, critically reflecting upon their usefulness. The price variable is the one of the significant ingredients in marketing mix of the organization. Price itself can effectively communicate with the consumers regarding the product or service. So, â€Å"when the pricing decision is made, the organization must consider several factors. These factors† such factor includes, Regulation of government, Perceptions in the market, supply, desired pricing position of the organization, demand and finally Competitors and Competition pricing policies. The final price of any product or service is influenced by various factors; these can be summarized into two that are internal and external factors. Internal Factors – Internal factors are those which are controllable by the organization and also, if required, it can be altered. Although, the company may have control ov er these internal factors creating a quick alteration is not always practical or realistic. For example, pricing of the product may depend closely on the efficiency of a manufacturing capability (e.g., how much can be manufactured in a certain time). External Factors - There are a numeral of influencing factors which are not restricted to the organization but will influence pricing decisions. The marketer needs to identify these factors to carry out various researches to observe what is happening in every marketplace that the organization serves, since result of these factors can change by marketplace. The Pricing Decision: As mentioned above, the pricing decision of the organization is impacted by various dissimilar factors. So, pricing decision at initial stage can be very time- consuming though these are exemptions. Normally pricing decision of the organization is complicated, hence it must involve the various cautions consideration of all these factors listed above to make a good decision. â€Å"The pricing strategy can be viewed as a function of competitive product quality and stage of the product life cycle† (Rashid et al. 1988, p. 194). Various models which influenced the pricing decision of the organizations are discussed below. Cost and Demand Oriented Pricing Models: In this model, organization uses demand or cost as a foundation for setting the price of the service or product. Traditionally, this type of orientation or model is applied to the theory of micro economics by forming demand curve on the basis of summation or outline of the person’s utility funct ions for consumers in the market. Thus, first thing is that to assess and identity the consumers perception regarding the product or services. Perception of the