Price in marketing is generally proposed by seller and the buyer then decide whether to accept it . It does not become a price until it is propose by one and accepted by the other.
In other words, the price of a product has influence on the price paid for other factors of production. We can therefore conclude that price is a basic regulator of the free enterprise system of economy.
Price is one of the element of marketing mix, because it is the only element in marketing that create revenue other are costs. price is an integral part of marketing management .
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Price also assume further importance within an economy during a period of inflation in that it affects the buyer behavior, as well as the consumer confidence in the economy.
Important of pricing
1 Price is the determinant of profitability:
Price of a product or products determines the profitability of a firm, in the final analysis by influencing the sales revenue.
Price is often used to off-set the weaknesses in other elements of the marketing-mix.
2 Price regulates demand:
Price increases or decreases the demand for the products. To increase the demand, reduce the price and increase the price to reduce the demand.
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3. Price Communicates value:
Price confirms value. If your customers pay your prices with little resistance and continue to come back for more, they obviously agree with the price you’ve set for the value you provide. The more comfortable your customers are with your prices, the more solid footing you are on within your market and industry
The more expensive a product or service is, the more valuable people often perceive it to be. By setting a high price, marketers communicate that the offering delivers a proportionate amount of value.
4.Price Increase customer base:
Lower prices can draw in new prospects, convincing them to leave competitors.
“Getting in” is not the same as “staying in.” You have to work to prove your value to them following that initial purchase. Otherwise they won’t stick around once you raise your prices to a more profitable level. That would make the low-price efforts useless. Make sure your strategy plans for sustainability and a loyal customer base.
5. Price is competitive weapon:
Since the product life span is directly related to the product’s competitiveness, pricing at any point in the life-cycle should reflect prevailing competitive conditions.
6. To sum up, Pricing determines the market standard. The decrease the expenses in the economy, the better is the purchasing energy inside the palms of customers. Price displays purchasing power of the market.