'n Ondersoek na die gebruik van multikriteriametodes vir strategiese prysbeleid / A. Bell

Products are priced in order to sell them and make a profit. Every firm, therefore, needs a pricingstrategy. Such a strategy should be simple. It should ensure simplicity in tactics and decisions andminimize complications.It is difficult to set a price with the help of only one pricing model. The price of a product may varydue to factors like geographical area, different clients and time difference. Prices must always becost-compatible.An essential step in deciding on a pricing strategy involves looking at the characteristics of pricingdecisions. The classic economic theory is based upon demand and supply and attempts to balancethese two concepts. In most cases it works on the basis of cost plus profit. This way of thinkingabout prices does not guarantee a profit, because costs and profit depend upon volume andvolume is dependent on the correct price. Prices can be cut at first. In this way only a small profitwill be ensured. If the price is too low it will not automatically ensure a profit.Usually little attention is paid to the market itself in deciding on a price. It is not an easy task toarrive at the 'envelope of acceptable prices". Not to fall into the standard trap of adding profit tocost, one has to have a broad overview of pricing strategies.Multiple approaches are followed in determining prices. Firstly, one can look at cost and itscharacteristics. By adding a profit margin to cost, one can determine a new price. It may be too lowor it may be too high, resulting in the risk that customers will buy the competition's product.It is there for essential to look at strategic concepts like the competition's price as well. The way abuyer looks at certain prices and then decides whether to buy or not, also plays a very importantrole.All of these factors have to be taken into consideration and all aspects have to be balanced toarrive at a price.A framework for pricing decisions includes the recognition of the need for a pricing decision,determining a price, developing a model, identifying and anticipating pricing problems, developingfeasible courses of action, forecasting the outcomes of each alternative and monitoring andreviewing the outcome of each action.Management's pricing decision is taken after studying all this information. Information can begiven as a single answer or in detail. Costs can be divided into direct costs and absorption costs.Although prices can be determined in more ways than one, the ideal is to take more than onefactor into consideration. Every aspect must carry a weight and these weights can be changed.That is why the multiple criteria decision method is so effective. With this method a few factors aretaken into account. Each of these factors adds to the price definition in a certain manner withregard to each product. By changing the profit margin, the price can be adjusted until one issatisfied with the new price.A company's structure, location and nature will play a role in determining which technique is usedto determine a price. The best technique is one that can be adjusted and where multiple criteriacan be set. The choice of a technique is a personal choice. The multi-criteria method is flexible andprices can be determined uniformly for all products or for a single product.