The Marketing Mix: Price (Edexcel IGCSE Business)

The Importance of Price

• Price is the only element of the marketing mix that relates directly to sales revenue and is vital to a business achieving its sales and marketing objectives

  • By understanding their customers, competitors, and costs, businesses can set prices that maximise revenue and profitability
    

• Businesses need to select the most appropriate methods of pricing to ensure that they are able to make a profit whilst meeting the needs and expectations of customers
  

  • A pricing strategy should reflect the brand and quality of the product 

  • The wrong strategy is likely to reduce the potential level of profitability

    • E.g. A low price for a luxury-branded product may deter consumers who often purchase these goods as status symbols

• A business may use more than one method of pricing across its product range
  

  • E.g. A large supermarket may offer premium-priced product ranges alongside a selection of loss leaders

Influences on Price

• A business needs to consider various factors when setting its pricing strategy

• Understanding these factors can help a business make informed decisions about its pricing and increase its chances of success
   

 Factors to Consider when Choosing a Pricing Strategy

• Retailers have had to adjust their pricing strategies to remain competitive in an online marketplace where customers can easily compare prices e.g www.comparethemarket.com 
  
  

• Pricing has changed to reflect the rise of price comparison through the use of price matching policies

  • Some retailers offer to match the prices of their rivals in order to prevent customers from switching to a competitor with a lower price