MARKET ECONOMICS AND PRICING

The purpose of marketing or, indeed, any organisational function is to help best achieve the organisational objective. Consequently, different objectives require different marketing strategies. In this article the objective of the chief executive shall be assumed to be the maximisation of trading profit on total investment. Trading profit is the profit after deducting bank interest, but before deducting long‐term loan interest, taxation and dividends: this is because bank interest is within the control of the chief executive, but these other charges are not. Total investment is the capital made available by the board of directors to the chief executive and includes ordinary shareholders' funds (ordinary share capital and reserves), preference capital and loan capital.