ECON 1 Lecture 11:
Lecture 9 – Marketing Mix (Price) 10 March 2020
Price
Definition:
• The monetary cost incurred by the buyer (Fetchko, Roy and Clow, 2019, pg. 21)
• Value expressed in monetary terms (Meir and Arthur, 2007, pg. 322)
Overview of Price
• Monetary value does not operate in isolation – a range of factors play a part in the purchase
decision.
• The price paid for a good or service is often the single most important factor in the decision-
making process for the consumer.
• Price is the only element of the traditional 4Ps marketing mix that produces revenue, with the
other aspects implemented as a cost the organisation (Kotler and Armstrong, 2004).
• Price strategies alone do not guarantee a ‘sale’ – it is intimately related to other aspects of the
marketing mix.
Price contributes to and determines
➢ Return on investment (ROI) for an organisation
➢ Market share
➢ Competitive position
➢ Revenue
➢ Consumer perceptions regarding quality, value for money and the desire for particular products
and services
(Meir and Arthur, 2007, pg. 323-324)
Prices as an effective marketing tactic. Why?
▪ Most readily changed
▪ One of the most effective tools in selling a product
▪ Highly ‘visible’ – changes are easily communicated through a wide variety of communications
methods
(Meir and Arthur, 2007, pg. 325)
Setting a price for a product/service
Influenced by:
The costs of doing business
How it compares with competing products/services
The life cycle of the product
How price-sensitive your customers are
What price conveys to your customers
Document Summary
Definition: the monetary cost incurred by the buyer (fetchko, roy and clow, 2019, pg. 21: value expressed in monetary terms (meir and arthur, 2007, pg. Return on investment (roi) for an organisation. Consumer perceptions regarding quality, value for money and the desire for particular products and services (meir and arthur, 2007, pg. Why: most readily changed, one of the most effective tools in selling a product, highly visible" changes are easily communicated through a wide variety of communications methods (meir and arthur, 2007, pg. What position your product has in the market. Efficient use of resources e. g. maximises facility usage. Fairness e. g. concessionary prices for low income households. Fixed costs costs that do not vary with production or sales level. Variable costs costs that vary directly with the level of production. Cost based pricing considers fixed cost and variable cost and adds a mark-up to make a profit. Going rate pricing price based on what competitors are charging.
