In this article we describe the Price component from the Marketing Mix.
The P of Price is a component of the marketing mix (product, price, place, promotion and, in some cases, personnel). By making the right adjustment in the marketing mix, a product or service can be succesfully marketed. This article describes the P of Price.
What is Price in the marketing mix?
Price actually stands for all sorts of things, a summary:
- Price = the exchange value of a product or service.
- Price = income ... other P's from the marketing mix are mostly expenditures
- Price = a direct influence ... other P's have mostly an indirect influence.
- Price = it is most often used/misused
Price is perhaps the most important component of the marketing mix because it ultimately determines the income flow, and with it, the continuity of a company.
Why Price - marketing mix?
It has already been discussed a little in the previous paragraph. Price determines the future income flow upon which the continuity of a company is based. A company takes on various activities and in order to be able to keep doing them in the future, a price policy needs be chosen. How do you determine the marketing mix price? In combining the marketing mix, it is important to contemplate well and to make thought-out choices based on research of, for example, the external environment (external analysis). In determining the price or price strategy, it’s just the same. Marketing mix price, therefore, consists of two parts. Because the price strategy can be chosen (part 2), it is of importance to gain insight into price-determining factors (part 1).
Part 1 - Price-determining factors
Of course, it is of importance for the choice of a strategy or determining a certain amount of price to have insight on the way the price is generated. A number of generic factors:
- Supply and Demand
- Message and Strategy
- Rules and Ethics
- Market factors
More information price-determining factors read the article by clicking on the following link: Pricing Strategy.
Part 2 – Choosing pricing strategies
After insight is gained into the price-determining factors, a substantiated choice for a certain price strategy can be taken. A number of popular price strategies:
|Skim price strategy||Discount pricing|
|Follow-the-leader||End-price minus method|
|Penetration price strategy||Cost-price plus method|
|Premium pricing||Price lining|
After that, adopt decisions with an eye on competition (for example, price-lowerings), discounts, and the actual pricing.
More information pricing strategies
For more information about pricing strategies, read the article by clicking on the following link: pricing strategies.