Pricing - Conclusion
Unlike the other ingredients of the marketing mix, price generates revenue, so arriving at the correct price is vital to the success of the business. However, there is no one magic pricing strategy that will guarantee success, so a firm should be constantly researching the market to identify a correct policy for its product or service.
One crucial factor to recognise at the end of this section is that firms may use a combination of pricing strategies in response to changes in the market and the marketing activities of competitors.
- Whenever you are faced with a question on pricing... think ELASTICITY - the two go together like complementary goods! No pricing change should be made without reflecting on the effect on sales revenue and profit, caused by consumer reaction to the change. Do not forget that reducing price can lead to an increase in sales revenue if the market is very price sensitive.
- No firm works in isolation so a change in price may be met by a similar reduction by competitors, so changing the nature of elasticity and the significance of revenue changes.