Price in Marketing Mix

Overview

This lecture introduces the concept of "price" in the marketing mix, its importance, and factors businesses consider when setting prices.

Price helps attract the right customers by matching product value to customer needs and willingness to pay.
Effective pricing balances business profit goals and customer perceptions of value.
Price must reflect the added value or solution offered by the product.
Pricing can influence both sales volume and overall business profitability.
Psychological pricing (e.g., $0.99 instead of $1) can impact consumer purchasing decisions.

Customers compare prices and expect higher-priced products to deliver greater value or features.
Added value is crucial in justifying higher prices.

Any price change should align with the other marketing mix elements: product, promotion, and place.

Production costs: Total costs involved in making the product.
Competitor pricing: Prices set by rival businesses for similar products.
Price elasticity of demand: How sensitive customer demand is to price changes.
Product life cycle: Whether the product is new or established affects pricing strategy.
Marketing objectives: The business’s goals, such as market share or premium branding.
Market positioning: How customers perceive the business and its products.
Market segmentation: Different prices may be set for different markets or regions.

Setting high prices for exclusivity or to cover higher costs.
Using low prices to compete, enter new markets, or target price-sensitive customers.
Adjusting prices for different markets based on regional factors.

Marketing Mix — Combination of factors (product, price, place, promotion) used to market a product.
Price Elasticity of Demand — The degree to which demand for a product changes as its price changes.
Added Value — Additional benefits or features that justify a higher price.
Psychological Pricing — Pricing techniques (e.g., $0.99) designed to have a psychological impact on consumers.