Marketing

Marketing Management-2

Synopsis- Developing pricing strategies and programs

Price is the one element of the market mix that can be easily altered. It also communicates to the market the company’s intended value positioning of the product or brand. Price is the single element of the marketing mix that contributes towards revenue. Pricing decisions tend to be very complex and is neglected by many marketers. Holistic marketers must take into account many factors in making pricing decisions.

A changing pricing environment

Pricing has changed completely. By using enticing marketing campaigns and product formulations many firms have leveraged the consumers buying power.

Internet allows sellers to discriminate between buyers and buyers to discriminate between sellers.

How companies price?

In small companies the boss does the price setting and in large firms line managers do it. When pricing becomes a key factor, companies often establish a pricing department to set appropriate prices (for e.g.: railroad, airways and etc.).

Consumer psychology and pricing

Consumers actively process price information. Marketers base the pricing decisions on how the consumers perceive prices and what they could consider the current actual price to be.

Reference prices: Comparing an observed price to the internal reference price they remember on an external frame of reference such as posted “regular retail price”.

Price quality inferences: Its image pricing. Consumers assess the quality of a product on the basis of the price it carries. Few examples are perfumes, apparels and expensive cars.

Price endings: Price endings play an important role as the customers view the price from left to right rather than rounding it off. Generally prices that end with odd numbers are very popular.

Setting the price

Step 1: Selecting the pricing objective

The company first decides where it wants to position its market offering. The clearer a firms objectives, the easier it is to set its...