What is pricing in marketing?
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Pricing is the method a company uses to set the price its product. There are various factors that may come into play. The price of the same or similar product of your competition, the type of market you want to buy your product ( low income to high income), location of the market, seasonal adjustments and other outside factors can all affect price. Outside factors may include economic stability or instablity, as we see in the economy today, weather related incidents, and even basic supply and demand. Usually, the idea is to set the price high enough to make a profit but low enough to attract consumer demand. However, some prices may be set artificially low to make the product a "loss leader" that helps get more people into a store.
One of the four major elements of the marketing mix is price. It is one of the four P's. Price, Product, Promotion and Place, or where the product is distributed.
The price is a very significant factor in determining the other elements of the marketing mix. Price determines the consumer group that will be targeted, as well as the advertising and promotion and distribution.
Pricing structure must take into account not only the cost to produce the product which includes materials, time, labor, overhead. But, must also consider the competition's price, and potential legal matters that may arise with the product.
New products are often priced at what is known as penetration pricing, which is an attempt by a company to capture a share of the market. This is often a lower price to draw customers away from the competition.
There are other pricing strategies used in marketing, it all depends on the product, the target market, the competition, the product's life cycle and the firm's expectation of expansion and distribution of the product.
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There are different ways of looking at pricing within the field of marketing. The price changes with the life cycle of the product and the marketing of the product changes also. However, you need a way of creating this price policy for your product. And there are different ways of doing that. They are Loss leader pricing, penetration pricing, price skimming, and differential pricing.
Just did my own project on this subject, wanted to share some great resources and papers I used:
Odlyzko Papers: A mathematicians project on Internet economics and pricing.
Price Discrimination: Business's that charge different prices to different groups of consumers for the same goods or services.
Pricing Strategy: Discusses pricing objectives, demand, regulations and revenues.
NetMBA: Pricing strategy and its 4 elements.
price is the amount paid by the customer for a service or a good.it is the main thing that links a customer and the producer.it is the most important aspect in the ingredients of marketing mix because it determines lose of customers (if the price is high sales are lower and revenue is lost) or lose of revenue(if it is to cheap sales may be high but will not cover the revenue).Pricing also involves a balance of being competitive and being profitable.
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