Pricing is an important strategic issue because it is related to product positioning.
The reason for this importance is that where the rest of the elements of the marketing mix are cost generators, price is a source of income and profits. Through pricing, the organization manages to support the cost of production, the cost of distribution, and the cost of promotion.
Simplistically, price is the value measured in money term in the part of the transaction between two parties where the buyer has to give something up the price to gain something offered by the other party or the seller.
Pricing is a complicated element, which needs to reflect supply and demand, the actual value of the object, and the perceived value of it in the mind of the consumer.
A price that does not reflect these factors and is either too high or too low will lead to unsuccessful sales. There is often a tendency for marketers to focus more on activities like promotion, product developmentand market research while prioritizing their responsibilities.
These are often perceived as the more interesting aspects of the product and marketing mix. However, pricing needs to be Marketing mix pricing its due attention since it has great impact on the rest of the activities and the company. Pricing is of vital importance because of the following reasons.
In comparison, a change to the product or to a distribution channel can take months and sometimes significant cost inputs. Similarly any promotion decisions will also require additional financial input.
Though it is important to plan for pricing changes and their impact on the brand and product perception, this can still be accomplished much faster than any other changes. Define the Right Pricing Any pricing decisions for a product need to be made through proper research, analysis and an eye on strategic objectives for the organization and the product.
A decision made too quickly with superficial assessment can result in a loss of revenue.
A price below the perceived value can lead to both a loss in potential additional revenue and a target audience that judges the quality of the brand through price points.
If this price is raised later on, the existing customers may feel like they are being unfairly burdened. A price set too high can result in potential buyers staying away altogether.
Pricing is often done by a team of experts who spend time conducting research that considers all variables of the market and brand. Pricing as a Trigger for First impressions In some product categories, a consumer will form a perception about its quality and relevance as soon as they see the price.
Eventually, the decision to buy or not may be based on the perceived value of the entire product or marketing mix offering.
But there is always a danger that the first impression triggered by the price point will either make the rest of the offering irrelevant or it will be a biased assessment.
Pricing as a Key to Sales Promotions Sales promotions are often a short time price based offering such as a percentage reduction or a two in one type offer.
These are meant to generate interest in the product or make use of a special occasion or event. Used wisely, this can be a useful method of increasing sales but the company must avoid the temptation to offer these special prices too often.
In this scenario, buyers will put off purchasing the product till the next sales promotion of price reduction. And get regular tips and tricks on topics such as marketing, financing, strategy, and management, so you can start and grow your company more successful.
Often, these objectives include: Keeping in mind revenue and costs, a company may want to maximize profits. Profit maximization objectives should be long term and not focus only on the short term. With less focus on profits, a company may focus on increasing revenues in order to increase market share and lower costs in the long term.
A company may want to sell a specific number of items to decrease long term costs. Another objective may be to increase the profit margin for each unit and not focus on the total number of units sold. A company may want to use price to signal high quality and establish itself as the quality leader.
If an organization has multiple revenue streams, it may not be too focused on recovering a hundred percent of its costs.
Sometimes, the best a company may want to do is to cover costs and to remain in the market. If the market is in decline or there are too many competitors, survival may take temporary priority over profit.
There may be a need to avoid price wars with competitors. So a company may maintain a stable price to continue a stable profit level. Some of these pricing strategies are the following. Penetration Pricing A low price is set by the company to build up sales and market share.A marketing mix usually refers to E.
Jerome McCarthy's 4-P classification for developing an effective marketing strategy. The four Ps are product, price. The constituents of marketing mix are said as marketing mix elements. Elements are also referred as decision variables.
Marketing mix consists of mainly four elements. Each element is also referred as mix, for example, product mix, price mix, promotion mix, and place mix. Each mix contains a set of.
As we know the marketing mix (made up of product, price, place and promotion) is the perfect combination of elements you need to get right for effective marketing. Pricing is one of the most important elements of the marketing mix, as it is the only element of the marketing mix, which generates a turnover for the organisation.
Digital marketing mix is fundamentally the same as Marketing Mix, which is an adaptation of Product, Price, Place and Promotion into digital marketing aspect.
Digital marketing can be commonly explained as 'Achieving marketing objectives through applying digital technologies'. The marketing mix (also known as the 4 Ps) is a foundation ph-vs.com marketing mix has been defined as the "set of marketing tools that the firm uses to pursue its marketing objectives in the target".Thus the marketing mix refers to four broad levels of marketing decision, namely: product, price, promotion, and place.
Marketing practice has been occurring for millennia, but marketing theory. Definition: The marketing mix refers to the set of actions, or tactics, that a company uses to promote its brand or product in the market. The 4Ps make up a typical marketing mix - Price, Product, Promotion and Place.