TABLE OF CONTENTS About this chapter
This chapter provides an overview of pricing as an element of the marketing mix.
After reading the chapter, you will understand:
Pricing from an economic, accounting and marketing perspective.
Pricing models/objectives and strategies.
The non-price dimension of price.
Revenue management.
Ethical decisions relating to pricing issues.
e-Marketing perspective relating to pricing.
Traditionally, pricing has been the poor relation of the marketing mix, with product, place and promotion seen as the main focus of marketing management. This is surprising, while the other 3Ps represent pure cost, price represents the generation of revenue. As Kotler (1999) states: Price differs from the other three marketing mix elements in that it produces revenue; the other elements create costs .
Effective pricing strategy requires input from across the organization. Sales, finance, operation and marketing all have a role to play in the process. While price-related decisions are often multi-functional, it is important to remember they are an integral part of the mix and, as such, cannot be set without reference to the entire mix. Understand how pricing effects positioning strategy is central to many marketing decisions. It should also be noted that price is the most (in theory) flexible mix element. A price can be changed instantly! However, the consequences of a price change can be wide-reaching, affecting both the organization and its competitors.
Remember, pricing involves much more than a simple financial transaction in return for a product. It greatly influences buyer behaviour. For example, consumers often use price...
