The Importance of Price
- Price is the only element of the marketing mix that relates directly to sales revenue and is vital to a business achieving its sales and marketing objectives
- By understanding their customers, competitors, and costs, businesses can set prices that maximise revenue and profitability
- By understanding their customers, competitors, and costs, businesses can set prices that maximise revenue and profitability
- Businesses need to select the most appropriate methods of pricing to ensure that they are able to make a profit whilst meeting the needs and expectations of customers
- A pricing strategy should reflect the brand and quality of the product
- The wrong strategy is likely to reduce the potential level of profitability
- E.g. A low price for a luxury-branded product may deter consumers who often purchase these goods as status symbols
- A business may use more than one method of pricing across its product range
- E.g. A large supermarket may offer premium-priced product ranges alongside a selection of loss leaders