The objective is to maximize profits while remaining competitive in the marketplace. Pricing can be based on either the cost price or market price (what the market will pay?). Regardless of the pricing method used, it is critical to know all of your costs involved in the delivery of your product or service. Knowing this will help avoid possible under pricing and operating losses.

• What control do you have over the product price (e.g. exclusive product, no competition, high market demand, etc.)?
• What are competitor prices and how do they price their products?
• What price and sales volume are needed to achieve profit objectives?
• Can you sell your product at different prices into different markets?
• Can you maintain your prices over time and what do you expect to happen to competitors prices?
• Are your prices quantity sensitive?

Promotion of your product or service and development of a promotion strategy is part of the market analysis. It is important to analyze what are the best methods of making your customer aware and what message will motivate them to buy. From the promotion strategy the advertising budget and overall sales plan are then developed.

Some items to consider:

• What media of advertising and sales do your competitors use?
• What media of advertising is best suited to reach your customer?
• What sales tools and training will be required for staff?
• What image are you attempting to build through your promotion?
• Packaging?

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