e-learningsite.com

free essays
Free essays

Marketing Mix

MARKETING 4

MarketingMix

MarketingMix

Pricingis an importantelementin thedevelopmentof a comprehensivemarketingmix, forthefactthatthepriceis theonlymarketingmix variable thatyieldsrevenueto thebusiness(Schindler, 2011). In reality,pricing is not a singleconceptbutrathera multifaceted factorwith diverseimplicationsforthemanufacturer,retailer andtheconsumer.Pricing strategyis paramountsince itaffectsboththebehaviorof theconsumerandtherevenuethata manufacturergeneratesfrom everyeconomicactivitycarriedout. In a freemarket(marketwithout pricerestriction)themanufacturersusespricing as a toolto facilitatecommercialactivitiesandas a weaponagainst competitorsin thesamelineof production(Schindler, 2011). Competitionin a competitivemarketimpliesmanufacturerwill be coercedto adjusttheir pricing strategiesconstantlyto takeinto accountchangingenvironmental circumstancesandconsumerbehavior

Requirementto fixmarketpricesat a certainlevel has immenseimpactson themarketingmix of themanufacturers.Theplaying groundissignificantly curtailedsince evenwhentheeconomicenvironmentdemandincreasein prices,thefixedpricerestrictionwould maketheir moveillegal.Along thesupplychainthepricesof thecommodityincreasesafter everylevel anditis thisincreasein priceenablesretailers to generateenoughrevenueto warrantsurvivalin themarket(Schindler, 2011). In thecircumstancewherethemanufacturerspriceis alsothepriceof theretailer, themarketsystemwillsystematicallycollapseandnopricestrategywillbe possibleas a marketingmix.

Themanufacturerhandsaretiedwhiletheretailers cannot augmentpricesto remaincompetitivein themarket.Fixedpriceson productssoldby manufacturersandretailers actsas a priceceiling.Assuchboththemanufacturerandtheretailer can onlylowertheir pricesbuthavenoconsentto increase.Whenthenumberof producersandretailers in themarketare many,theeffectsof priceceilingwould be insignificantifitis equalto theprevailingmarketprices.Thisis becausein competitivemarketpricesare homogenous. In sucha marketthepriceas a toolofmarketingmix is redundant.Butifthemarketstructureis not competitivethenfixedpricing willhavemassiveeffectson themarketingmix andthemarketsystem(Schindler, 2011).

Pricingdecisionmust alwaysreflectandsupportparticularmarketingstrategy.Pricing decisionshouldthereforebeintegratedwith theotherPs (product,placesandpromotion).Pricing must alsobe in linewith positioning strategiesandmarkettargeting (Sharma, 2011). Clearly,ifa manufacturerproducesahighqualityproductoroffersa high qualityserviceaimedto be at thehelmof themarket,with a prestigeimage,itwould onlybe appropriateto seta pricethat is higherthan theprevailingmarketprice(fixedprice).Indeed,itwould be a colossalmistaketo seta lowpriceevenifthecostefficientpermittedthis.Pricesshouldthereforebeconsistentwith otherfactorsin themarketingmix andtheselectedpositioning strategy(Burrow &amp Bosiljevac, 2009). Thisis not possiblein theeventwherethere isfixedpricerestrictionin themarketsystem.

Additionally,manufacturersusehighprices,whatis commonlyreferredto as ‘skimming prices’as a pricestrategyfornewproductsin themarket,especiallywhennewproductisperceivedby consumerto possessuniquequalities(Burrow &amp Bosiljevac, 2009). Pricedifferentiation that enablesretailers to chargedifferentpricesdepending on thepurchasingpowerof themarketsegmentis not possiblewhenthere are pricerestrictionsin themarketsystem.Amarketmix is developedto increasethesatisfactionof endconsumersby offeringgoodsandservicesthat are differentandof betterqualitythan thoseprovidedby thecompetitor.

References

Burrow,J., &amp Bosiljevac, J. (2009). Marketing.Mason, OH: South-Western Cengage Learning.

Schindler,M.R.(2011).PricingStrategies: A Marketing Approach.London: Sage Publications.

Sharma,K.P.(2011).Entrepreneurship.NewDelhi. FK Publications