Price is a part of the marketing mix. Besides, it is an element of 4 marketing mix. The other element of the marketing mix is product, place, and promotion. There is no other element which generates money. The only price can help to generate money for a firm.
However, price encourages competition among several firms. Because low price ensures higher sales than competitors. Moreover, it also represents a loss of potential profit from the sale of an item. As a result, competition leads firms to focus on the customer. Because, if they don’t do it, they may suffer a lot. Thus, their loyal customers may switch to competitors products.
That’s why; firms should ensure superior customers value than competitors offerings. Besides, they should consider the pricing also. Effective pricing ensures product positioning and total profitability over product life cycles. However, effective pricing along with quality can produce a favorable strategic position and in turn higher profits.
Firms can classify their pricing in four ways. Like –
Here, the low price is set for the mass people. So that everyone can afford this. Besides, the high price is set for higher class people who have higher purchasing power. On the other hand, Average price is set for all types of people. However, the medium price is set for the middle-class people who are restricted by their income.
Marketing management must weigh to the behavioral aspects of pricing as well as other marketing mix. Price is the only element to attain the goals set of firms. However, it is related to profitable sales growth. The elements of the marketing mix are synergistic. Because all action is taken together to increase each effectiveness. To accomplish this all are equally important.
In using the marketing mix, the price takes more emphasis. So, the relationships of each marketing mix to one another impact on the total marketing programmed. These interactions can occur in consistency, integration, and leverage.
Consistency is the logical and useful fit between elements. Sometimes, it is inconsistent to set a low price and distribute to the premium product in low quality. Generally, premium products have excellent quality. Besides, its price is higher than the competitors. However, it needs high-quality channel outlets for distribution. In contrast, non-premium products have low quality, lower prices and mass distributed.
however, Integration is the harmonious interaction among the elements of the marketing mix. Integration needs extensive advertising with a high selling price. Because the added value permits extensive advertising. This in turns creates product positioning which justifies high prices. Another name of integration is promotional pricing. Here, low prices have no combination with advertising and merchandising.
Leverage means the interaction of each element of the marketing mix. It helps to achieve the best advantage of the total marketing mix. For example, if the reduction of price is more appropriate than investing in promotion for capturing more market share and customer attention then it would be a sensible decision. On the other hand, if the discount price brings diminishing returns, it would be sensible to shifts the other element.
So we understand the importance of pricing is a part of marketing clearly. We should careful in our practical life.