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Price as a component of the marketing mix

This week, we will continue our 12 Ps Marketing series blogs by discussing price.

What is a price?

The cost of the goods or services that the consumer pays is known as the price.

Setting a pricing throughout the product marketing process is crucial in order to create a product that is both affordable for customers and lucrative for the company. Prices can change depending on supply and demand, as well as the product's sales cycle. It also depends on the package (including size), the discounts, the period, the place, the delivery, and other offer-related factors. The relationship between supply and demand, as well as the product's sales cycle, can affect the price.

Price is an act of balance. If you go too high, you risk losing sales. If you go too low, you risk losing money. While some companies could increase their prices to compete with the market, others might drop them—especially if they are advertising a premium brand. Pricing may be challenging because you have to calculate both the value of what you are offering and the cost to generate it in terms of resources, labour, and overhead.

Marketing decisions made about price

Studying the target market and what customers are willing to pay for a product or service is crucial to determine its most lucrative price. There are a variety of different pricing strategies to take into account. But, before making a decision, you should:

  • evaluate the price of the competition.

  • think about where you want to position yourself on the pricing spectrum.

  • ask if you want to charge the same as everyone else, charge more as a premium item, or charge less as a value item?

  • make decisions on list pricing, discount pricing, special offer pricing, credit terms or payment.

Questions usually asked when making the decisions are:

  • How much do the rival companies charge for comparable goods?

  • What is the target consumer's purchasing power, affordability, and price range?

  • What is the cheapest price at which the product can be sold?

  • What is the maximum price at which the product can be sold?

  • What price range is appropriate for the target market?

  • Which pricing best suits the target market?

In summary, a product's price is crucial to its success. For instance, just a few customers will buy a product if a product is overpriced, on the other hand, some customers can have the idea that it is of inferior quality due to its excessively low price, which would discourage them from buying it. With a balanced pricing, you can maintain your competitiveness and make a respectable amount of profit.

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