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Marketing Mix: The Price (B)
by Laurus Nobilis
 

What is the Price? What are the pricing goals of marketing mix?
 
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Posted: Jul 2009


 
Marketing Mix Price The Price is the one of components of marketing Mix, along with Promotion, Product Distribution and Product. The price is usually defined as financially expressed value of the product or service at the market. Price levels are forming the public opinion about a specific supplier. For modern shopper the price is not only the expression of money outflow, but also represent a certain value, benefit or satisfaction perceived by certain product / service.


The price has specific relationship with other components of marketing mix. Actually the price is the only component that generates revenue, while other components generate costs. Manufacturing of the product represent the cost. The distribution of the product also generate the cost. The promotion usually creates the increase of demand for the product/service, but directly also creates costs. All these costs needs to be covered through the price.

Still, the goal of the price is not only to cover the basic costs of manufacturing, distribution and promotion. The function of the price is much more complex and depends on different variables. Goals of price depends on company's policy against various relationships:
 

Pricing Goals - Marketing Mix Price
 

Profit oriented goals are including three main variables. Profit maximizing has the goal of extraction of maximal possible profit. Satisfactory profit goals target the specific profit rate. Return on investment pricing is primarily focused on direct return of investment to the investor.

Sales oriented goals can have two main targets. Market share approach is targeting a specific price level that should bring the company to the specific position in the market. Sales maximizing prices is supposed to bring direct increase of profit.

Competition variable is very important, therefore the company can adopt several price policies that should address the competition in appropriate way. Competition avoiding process have a goal of avoiding clashes ( price wars ) with competition. Repelling prices policy has the aim of discouraging the competition from entering the new market or product category. Stabile prices policy is the common price strategy that brings balance between attractiveness to shoppers and challenge to competition.

Prestige price positioning have relatively high price level. There is a certain segment of customers that are willing to pay high premium price in order to distinguish themselves from the majority of the market. These customers are building their lifestyle image by purchasing exclusive and luxury products.

Status Quo is pricing policy when company does not want to make to make disturbances in the market. This is the case with the products that have the specific position in the market, while any bigger alteration in price policy would not bring much value.
 

 

 

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