The Marketing Mix: Price (Edexcel IGCSE Business)
Revision Note
Written by: Lisa Eades
Reviewed by: Steve Vorster
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
Factor | Explanation |
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Number of USPs/ |
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Technology |
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Level of Competition |
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Strength of the Brand |
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Stage in the Product Life Cycle |
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Costs and the Need to |
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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
Examiner Tips and Tricks
Pricing is influenced by other elements of the marketing mix, as well as the stages of the product life cycle. Consider these carefully when you make recommendations for suitable pricing strategies.
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