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Price Setting Approach and Strategies

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A price-setting process is a sophisticated multi-step approach that has to take into account the external environment, competitors, and consumer demand for the product, as well as internal factors such as operating costs.
1. After summarizing the main steps of the price setting process and the most important aspect of each stage, choose one of those steps and discuss the relevant challenges that your organization (please choose an organization) may (or does) face while setting the price. Specifically mention the factors that the organization must consider in determining the price.
2. In some cases a company has to cut its prices or react to price cuts initiated by competitors. What are the various strategies for and possible implications of such actions for the organization?

You are expected to present research findings (from the company or industry, as well as academic) while answering this question.

APA style and references please

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Solution Summary

Setting price of a product or service is a multi step approach that requires to take several factors into account. This response summarizes the main steps in price setting approach and explains one of the step in detail in the context of Apple Inc. product iPhone. Also, it is discussed what strategies company shall adopt in case of price cuts.

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Steps of Price Setting Process
Price Objective Selection: In this step, objective of setting price are developed such as profit increase, market share, product survival etc. Market conditions and consumer demand are the important aspects of this step.
Demand Determination: In this step, demand of the product in the market is analyzed to set the pricing. Demand is the important aspect of this step (Price Setting Process, 13 June 2010).
Cost Estimation: In this step, cost of the product is determined including both variable and fixed cost. So, both fixed and variable costs are important aspects of this step.
Selection of Price Method: In this step, a good pricing method is chosen to set the price. The important aspect of this step is the selection of method.
Final Price Selection: After choosing the pricing method, final price is determined in this step of price setting process. Selected pricing method plays a great role in price finalization.
Challenges of Step
Out of the price setting process, price objective selection step is chosen for Apple Inc. The firm may face challenges while conducting this step due to volatile nature of economic environment (Apple Inc, 2015). ...

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