Unit II PRICING CONCEPT & MEANING OF PRICING The

Transcript:Unit II PRICING CONCEPT & MEANING OF PRICING The:
Unit II PRICING CONCEPT & MEANING OF PRICING The concept of product pricing is very significant and plays a decisive role in the field of marketing A manufacturer has to take pricing decision before bringing the product in the market The market demand, consumer support, margin of profit, ability to face competition etc. are related to and dependent on the pricing It acts as a base for buying and selling transactions. It facilitates transfer of ownership and possession of goods and services from producers to consumers. Price means the expression of value or utility in terms of money. In other words pricing means fixing the market price of a commodity or service. IMPORTANCE OF PRICING Pricing act as a demand regulator and controls the demand for the products of the company. It acts as a major tool for determining profitability of a firm. Price can be used as sales promotion technique by offering discount and other incentives to consumers and dealers. Fair and attractive pricing facilitates consumer support, large scale sales, quick turnover and high profits. Majority of the companies formulate their marketing strategy taking price as a base. Pricing policy can be used effectively for adjusting with the market changes or changes in the policies of competitors. Factors influencing pricing Marketing Mix Strategy: Price of a product or service is highly influenced by other elements of marketing mix. The product life cycle through which the product is passing through affects the price of the product. In the introductory product life cycle, the price is likely to be high. The channels of Distribution, location of warehousing and the transportation involved also influence the price determination. Promotion efforts reflect into final price. The amount of money spent by particular company reflect in the prices to be charged. If the intermediaries are to undertake promotion work, they will be charged a lower price and vice versa. 2. Costs: Cost of a product is the single most important factor to influence the final price. If the cost of a product is very high, then the price of a product would also be high and vice versa. 3. Nature of the market and demand: What is the expectation of the market about the product or services? What is the demand level for the product at different prices? If the market is monopoly, company can charge high price for their product but if the market