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Price mix includes :-
the study of pricing
importance of pricing
objectives of pricing
various factors influencing pricing
pricing methods and strategies
kinds of pricing and Pricing procedure.
Price is the key factor which besides the sale of the product on the important aspect in the marketing .The main objective of a firm i.e. to earn a profit, very much depends upon its price decision. The price level and sales volume together decide the revenue of . any business. As the sales volume in itself is ?ependent on price, pricing really becomes the key to the revenue of the business. Thus, pricing becomes crucial to profit as well. Pricing becomes a vital decision area on account of many other factors.
Pricing is the complex mechanism and. it is the measuring rod of the success firm more than one way. It is simultaneously a strategic element as it is related to the perception of quality and a major tactical variable, as it can be changed quickly for competitive purposes. Changes in price can be made much faster than changes in any other marketing mix variables.
To a buyer, price is the value placed on what is exchanged. Almost anything of value ideas, services, rights and goods can be assessed by a price because in our society the financial price is the measurement of value commonly used in exchanges. Financial price easily quantifies value and affords comparability for choos !lg products.
Economist defines "price as the exchange value of a product or service always expressed in money". The consumer answers the question (Is it worth it?) in terms of a familiar equation
Satisfaction = Benefits -cost
The price is the cost part of the equation. It indicates scarifies of purchasing power. When the bundle of benefits exceeds the price (cost), consumer gets real satisfaction When the price (cost) turns out higher than the expected benefits and uses, the consumer user has post-purchase dissatisfaction and repeat purchase is out of question.
Importance of pricing
Price is so essential for both the seller and the buyer. In the money economy there cannot be marketing without price. The price often article is its market of exchange value expressed in money. Either a buyer or a seller may propose a price in the form of a bid or an offer. In a competitive economy price is determined by free play of demand and supply. Price is the centre or focus around which our entire economic system revolves. tistakes on pricing decision seriously affect the firm. its growth, profits and future.
Price influence consumer purchase decisions. It reflects purchasing power of money. It can determine living standards. It regulates production, distribution and consumption of goods. It indicates recession or prosperity. It guides rent, wages, interest and profits. It governs optimum use of our scarce economic resources. Price is always an important consideration both to the buyer and the seller. It can often spell success or disaster to a firm.
Prices in markets are not carried in stone, they must be evaluated at regular intervals and adjusted if necessary. Similarly, pricing objectives may vary depending on the stage in the product life style.
Profit is one of the major objectives in pricing for any firms adopt profit optimization rather than profit maximization as the pricing objective.: usually, an optimum level of profits over a long period is considered as a more sound objective of pricing than maximum profits in the short-term. Obviously, 'optimum' is a vague term. Its distribution will vary from firm to firm. The firm must evolve a clear idea of the optimum from its perception of business realities and the standards it has set for itself.
A variety of objectives may guide pricing decisions:-
1. Profit Maximization
The important objective of the pricing decision is to maximize the profit of a fmn. Therefore pricing policy should be determined in such a way so that the company can earn the maximum profits. The pricing policy can be helpful only in the short period and the concern will lose its standing in the market very soon. Moreover, competitors will very soon oust him from the market. So. the pricing decision should be taken with a view to maximize the profits for long.
2. Stability of prices
Any organization or business firm adopt the stable price policy above can win the confidence of the buyers. It will also add to the good will of the firm. For this purpose, the organization should consider long run and short run elements.