? For OfficeMax’s executives, it is extremely important to understand what profit-oriented objectives of pricing mean and imply in shaping the marketing mix. A target return objective sets a specific level of profit as an objective. Often this amount is stated as a percentage of sales or of capital investment. A target return objective has administrative advantages in a large tour company. Performance can be compared against the target. A profit maximization object, as pursued by OfficeMax’s executives in recent years, seeks to get as much gross and net profit as possible. It might be started as a desire to earn a rapid return on investment. Some people believe that anyone seeking a profit maximization objective will charge high prices that are not in the public interest. Economic theory, however, does not support this idea. Pricing to archive profit maximization does not always lead to high prices. Demand and supply may bring extremely high prices to the tourist industry only when competition cannot offer good substitutes. But this happens if and only if demand is inelastic. If demand is very elastic, profit maximizes may charge relatively low prices. Low prices expand the market size and result in greater sales and profits for OfficeMax.Profit maximization can also produce desirable results indirectly. Consumers may vote with their purchase dollars for firms that do the right thing. The profits from voting guide other firms to do the right thing to be competitive. In the intensely competitive office supply industry, the competitors must avoid adopting status-quo objectives. This is often called the “don’t rock the pricing boat” strategy for pricing. They may be stated as stabilizing prices or meeting competition and avoid the need for hard decisions to try to improve profits. A status quo pricing objective may be part of an aggressive overall market strategy focusing on non-price competition. This means...
