Pricing: The Determining Factor of Marketing

Importance of Pricing with Example

Pricing can be termed as one of the most vital elements of the marketing mix and strategies. The pricing helps with the generation of turnover for businesses and organizations. The price can be defined as the monetary amount of the product and services or the amount of money that the customers need to pay for gaining the benefit of using the product or service. The pricing can be termed important as it affects all the parties involved like the production, distribution, and consumer of the products. The price can also affect the profit to be generated and volumes to be produced. Price has a significant effect on marketing, sales, profit margins, business positioning, competition, and market share. The products and services need to have the right price and price strategy for remaining competitive because the market is always changing patterns and trends. The correct price can help with bringing value to the product developed, helping to generate the profits needed for the organization for sustainable growth and continuous changes. The pricing is vital for defining the values for products and how the product would be received by the customer, investing their time and money.

What is Price determinant in marketing?

Price can be defined as the amount of monetary value required to be paid for services and products. The amount of money is changed with the customers offering them the benefit of utilizing the item. Factors that help in determining the real price of the product or service are the:

Product cost: cost required for manufacturing and developing the product

The supply and demand along with product utilities: The product’s utilities help in defining the price along with the supply and demand of the product in the market.

The extent of current competitors: The current positionality of similar organizations are needed to be understood to determine the right price, keeping the product profitable and competitive in the market

Governmental regulations: The rules set by the government and legal aspects of the society can also lead to determining the correct price adhering to the laws.

Marketing methods: The marketing methods that are utilized throughout the life cycle of a product to be developed and sold can be beneficial in determining the correct price and understanding the various factors of influence.

Price objectives: Price should be set according to the pricing objectives that work as the goals that help the organization in setting the cost for the customers helping the organization to benefit.

What are the factors determining the Pricing?

The factors that affect pricing can be of two varied types: Internal and external factors that help with the determination of the price to be set.

The internal factors are the ones that operate inside the organization. Some of the internal factors that help in determining the price are:

• Organizational factors or the features of the organizational management that help with the determination of the price range and distinct price.
• The marketing mix is also needed for determining price, being in sync to offer the consumers the most attractive prices.
• Product differentiation or the unavailability of similar products is not common for products or services, thus price is needed to be determined on the benefits offered by the product to the consumers based on the factor that makes the product unique, forcing customers to pay a better price.
• The overall cost of making the product is needed to be determined, calculating the input and output costs to determine the correct price to be beneficial and competitive.

The external factors cannot be managed by the organization affecting the organization as a whole for determining the prices. Some of the factors are:

• The demand for the product has a significant impact on the product price as when the supply of the raw material is fixed and the demand is rising, the price can be set higher. However, if the demand tends to increase then the price must decrease to for surviving in the market.
• The price to be set must provide ample competition in the market without any compromisation of the product quality. Other than monopolistic markets, determining the price of the competitors is necessary to set the correct price to attract more customers.
• Supplies also majorly affect the cost as the rarity of supplies might lead to a higher price of the product.

Thus, these factors are needed to be understood for determining the correct price.

What factors affect Pricing in marketing?

The major factors that affect the prices are:

• Pricing objectives are the goals describing the role and requirement of price in the organization for the long run.
• The overall cost of the product is needed to be determined to form a profitable price
• The elasticity of the product demand is closely related to the price because if the demand increases the price increases and if the demand decreases the price decreases.
• The competitors are needed to be assessed for determining the right price to be competitive, and profitable and the product quality is good.
• The channels of distribution must be well established as the distribution is needed to be efficient for powering the product costs.
• The customers are needed to be assessed for their disposable income and pattern of buying.
• Governmental rules and legal policies are also major factors in determining the price.
• The marketing position is vital for the organization to determine the price.

All these various factors affect the prices in marketing.

Why Pricing is an important strategy in marketing?

The price can be determined as the amount that is required to be paid by the customers to gain the benefit of the product. The pricing of the product is mainly determined by the owner of the organization. The price is needed to be determined appropriately, understanding the target market and what the consumers might be willing to pay for as well as the profit margins that are required to be met. The pricing strategies can be termed as the tactical decisions made by the higher management in the organization for increasing sales and maximizing profit by selling goods and services at a strategic price. The prices are needed to be determined with an appropriate strategy as higher prices tend to dissatisfy the consumers and the lower costs might not be able to generate a profit margin.