Price - crucial element of marketing mix.

Price is normally express in monetary terms.It is the worth of a product or service in monetary terms. It is the monetary sacrifice which a buyer makes when when he buys something. Price may be called by different names for example, price for education is tuition fee, price for using road etc. is toll, price for the job is salary, price for the job is salary, the price for apartments is rent etc. 
Assigning a monetary value to products or services or fixing the price of a product or service is not an easy job. Various factors need to be evaluated.
Price is the value which a buyer passes on to the seller in lieu of the product or service provider. Price is a crucial element of the marketing mix because the customer is very sensitive to this element. Little variation in the price may shift your customer to a competitor's product.
Price mix refers to the important decision related to fixing of the price of a commodity. These decisions can be related to fixing cost etc. 
Few factors kept in mind while fixing the price of a commodity or service:
1. Pricing objectives like 
     (a) Obtaining market share leadership.
     (b) Surviving in a competitive market.
     (c) Attaining product quality leadership.
2. Product coat
3. Extent of competition in the market. 
4. Customer's demand and utility. 
5. Government and legal regulations.
6. Marketing methods used.

Now, why is PRICING such an important factor?
Price is the only element in marketing mix that produces revenue other elements produce cost. Also, price is crucial and the most important element of marketing mix due to the following reasons:
1. Key to revenue
2. Attract customers
3. Edge over competitor
4. Crucial to profile
5. Platform for achieving other objectives
 
Next, we must know what are the pricing strategies. 
Extensively, there are two pricing strategies:
1. Price Skimming 
Under this strategy, a high introductory price is charged for an innovative product and later on the price is reduced when more marketers enter the market with some type of product, for example, Song, Philips, Apple etc.
When a new technology is introduced, then a high price is charged for the product. When the same technology is used by other electronic companies in their products also then the price is reduced. Generally, innovators use price skimming strategy to get reward for their research and development.
The price skimming strategy cannot be used by every marketer. For using this strategy, following condition are must :
(a) The product must be highly distinctive and demand for that product must be very inelastic. The high introductory price can be charged only for unique products and the products for which easy substitute are not available customers pay high price for its novelty and uniqueness. 
(b) The company must be to maintain its uniqueness for some time. If the product can be copied easily then price skimming will not bring revenue for longer time.
(c) Presence of class market segment. To use price skimming strategy, there must be customer in the market who value the uniqueness of the product and are ready to pay high price.

2. Penetrating Pricing 
This strategy means using lower initial price to capture a larger market. This forces the customer to buy the product and company can capture a very big share and leave very small share for competitors. Penetration pricing is attractive when the following conditions are satisfied :
1. The price elasticity of demand is high and was substitutes of that products are available.
2. The firm can increase its production capacity with increase in demand.
3. When a customer is highly price-sensitive which means customers easily shift to another brand if it is available at low price.
4. When company has to face high competition while launching the product.
For example:- the Reliance company followed penetrating pricing strategy when it introduced mobile phones. It offered it at low price that it captured big share of mobile phone market. 
Although there is no best way to conduct marketing research but by using scientific method we can assure more objectivity and minimise the element of uncertainty. 





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