Price is the only element of the marketing mix that generates revenue; all others (product, place, promotion) create cost. Pricing decisions directly affect:
Pricing is also sensitive: even a small price change can significantly change demand and profit. Therefore, pricing must balance cost, customer value and competition.
Price is the amount of money charged for a product/service, or the value exchanged by customers to obtain benefits.
Importance:
A company may price to achieve different objectives:
Exam tip: mention that objective choice depends on market conditions and company goals.
Pricing is often described as the interaction of three Cs:
Good pricing finds a balance among these.
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Pricing objectives differ by business goals. Any three are:
Thus, objectives guide the choice of method and strategy.
Internal factors: cost of production/distribution, company objectives, marketing strategy, PLC stage, brand positioning.
External factors: demand and elasticity, customer perceived value, competitor prices, government regulation/taxes, economic conditions (inflation, income).
Pricing decisions are made by balancing these internal and external influences.
Marketing management is “planning, organising, controlling and implementing of marketing programmes, policies, strategies and tactics designed to create and satisfy the demand for the firms' product offerings or services as a means of generating an acceptable profit.”
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Price is the only element of the marketing mix that generates revenue; all others (product, place, promotion) create cost. Pricing decisions directly affect:
Pricing is also sensitive: even a small price change can significantly change demand and profit. Therefore, pricing must balance cost, customer value and competition.
Price is the amount of money charged for a product/service, or the value exchanged by customers to obtain benefits.
Importance:
A company may price to achieve different objectives:
Exam tip: mention that objective choice depends on market conditions and company goals.
Pricing is often described as the interaction of three Cs:
Good pricing finds a balance among these.
Pros: simple, ensures cost coverage. Cons: ignores demand and competition.
Pros: captures value, higher profitability. Cons: needs research and careful estimation.
Pros: easy and competitive. Cons: may ignore cost structure and value differences.
Psychological pricing uses human perception:
These strategies work when customers judge value by price cues.
Discounts are price reductions to encourage buying:
Allowances may include promotional support or exchange schemes.
Common adjustments:
Pricing policy should be consistent with brand image and long-term profitability.
If these notes helped you, a quick review supports the project and helps more students find it.
Pricing decision process is a step-by-step approach to set a price that matches objectives, customer value and competition.
Thus, final price is not only cost-based; it is the result of balancing objective, customer value and competition.