The Price Is Element Of Marketing Mix Marketing Essay

The Price is component of marketing mix, which traditionally, has operated as one of the major determiners of purchaser pick. Furthermore, Kotler ( 2009 ) found that the scene by company monetary value should run into the perceived value proposition. Therefore the company does non set merely a individual monetary value, but provide pricing scheme, which included geographical differences of markets, client ‘s cleavage, purchase timing, bringing frequence, warrants and guarantees, service contracts, and others ( Kotler et al, 2009 ) . Therefore, Kotler ( 2009 ) outlined that a company should supply monetary value – version schemes such as geografical pricing, monetary value and price reductions and allowances, promotional pricing and prejudiced pricing.

Geografical pricing

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In geografical pricing, the company ‘s pricing scheme varies from market to market ( Albaum et al, 2005 ) . The company desides to standardize and accommodate merchandise and publicity schemes in foreign markets ( Noonan, 1999 ) . Some people believe that the choise of selling schemes is influenced on pricing. For illustration, a company decide to accommodate its merchandise to fulfill alone clients demands which can take to altering of pricing scheme. Besides, it could be necessary for the company analyses future monetary value scheme on foreign market: bear downing higher monetary values to distant clients to cover bringing ‘s cost or a lower monetary value to acquire extra market portion ( Kotler et al, 2009 ) .

Monetary value price reductions and allowances

Discounts and allowances are decreases to the merchandising monetary value of goods or services. They can be applied anyplace in the distribution channel between the maker, jobbers ( such as distributers, jobbers, or retail merchants ) , and retail client. Typically, they are used to advance gross revenues, cut down stock list, and wages or encourage behaviours ( Kotler et al, 2009 ) .

Table 4.1. Monetary value price reductions and allowances



Cash price reduction

To promote clients to pay their measures within a given period of clip, such as 10 yearss.

Measure price reduction

A monetary value decrease to those who buy big volumes. Measure price reductions must be offered every bit to all clients and must non transcend the cost economy to the marketer. They can be offered on each order placed or on the figure of units ordered over a given period.

Trade or functional price reduction

To “ honor ” a client for maps performed, such as for put ining a peculiar trade name of storm Windowss in houses being built or for carrying a peculiar trade name of vesture in a shop.

Seasonal price reduction

To promote purchasers to do purchases during the “ off season ” . Examples: house pigment and bathing suits in the autumn and winter and visits to winter resort countries during the summer.


An excess payment designed to derive reseller engagement in particular programmes. Trade- in allowances are granted for turning in an old point when purchasing a new 1. Promotional allowances wages traders for take parting advertisement and gross revenues support programmes.

Sours: Zikmund and d’Amico ( 1995, p. 528 ) , Kotler et Al ( 2009, p.599 )

Promotional pricing

Some people believe that promotional pricing is most powerful promotional techniques, which involves cut downing monetary values of a merchandise or service to pull clients. Promotional pricing scheme is frequently based on cut downing monetary values to unsustainably low degrees ( Kotler et al, 2009 ) . For case, merchandises and services can be sold below cost or acquire “ one free ” scheme may even be used. It could be suggested, intererst in goods can be increased dramatically and can take to gain addition. However, Kotler ( 2009 ) stressed that “ promotional pricing schemes ” are frequently a zero -sum game. It means that in same instances, these schemes do non work, but if they work, rivals copy them and they loose their effectivity ( Kotler et al, 2009 ) .

Discriminatory pricing

In wide footings, one can state that monetary value favoritism exists when two “ similar ” merchandises which have the same fringy cost to bring forth are sold by a i¬?rm at different monetary values ( Armstrong, 2006 ) . There are free chief economic motivations for monetary value favoritism. The first motivation is puting monetary value to each client depending on the strength of her or him demand ( Kotler et al, 2009 ) . Second, monetary value depends on volume of purchasing ( Kotler et al, 2009 ) . The 3rd motivation is based on bear downing different sums to different categories of purchasers ( Kotler et al, 2009 )

Nowadays, it could be stressed that the Internet has reshaped the pricing scheme. Some people believe that the company should make particular pricing scheme for e- commercialism. The chief deductions of the Internet for the Price are given in Table following holla.

Table 4.2. The chief deductions of the Internet for the Price

Price snap of demand

It illustrates the dependance and interaction of demand and monetary values. “ Elastic ” merchandise is merchandise which responsive to monetary value ( a little alteration in monetary value leads to increase or cut down the demand well ) . A merchandise is “ inelastic ” if a big alteration in monetary value leads to little alterations in demand.


It is process when a merchandise becomes identical from others like it and consumers buy on one ( same ) monetary value.

Dynamic pricing and auctions

Dynamic pricing schemes such as auctions, group purchasing, and others in e- commercialism have some benefits. First, a company can recieve net income from one client by supplying customized pricing for different market sections. Second, a company can roll up information about market and the monetary value sensitivenesss of its clients.

Alternate pricing construction

With the development of eBusiness and shopping on-line, there are a fluctuation in pricing options, which included basic monetary value, price reductions, add – ons and excess merchandises and services, warrants and guarantees, refund policies, order cancellation footings.

Sours: Chaffey ( 2009, p. 457 – 460 ) , Surowiecki ( 1998 ) , Flore ( 2005 )



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