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Pricing Strategy Essay

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Below is an essay on "Pricing Strategy" from Anti Essays, your source for research papers, essays, and term paper examples.

Price is one of the four core elements of the marketing mix, and is often seen as one of the most difficult ones to manage. This is because the price a company charges for its products or services will have a major impact on the bottom line revenue and profits, but pricing is also an important strategic issue, and a vital part of positioning a product in a market segment. As such, companies will need to consider how their price will affect, and be affected by, the marketing strategy; the other elements in the marketing mix; and any environmental factors. At the same time, the company will need to understand how the price will affect demand; how the fixed and variable costs will behave over time; and the ultimate strategic objectives of the company, whether they are profit maximisation, revenue maximisation, growth maximisation or some other. Only then can a pricing method and structure truly be determined.
Pricing must first be considered as part of the marketing strategy and marketing mix. This is because the ultimate price of the product will need to be determined by its quality, and hence the price will have a key impact on the product development. In addition, the impact of price on the quantity demanded will play a key role, depending on whether the company wishes to maximise its revenue or maximise its profits. Finally, companies need to consider the competitive and regulatory environment in which it operates when thinking about price. If the company sets a price much lower than the rest of the market may trigger a price war, harming market share; but setting a price too high risks failing to attract customers from competitors with a cheaper product. In addition, regulatory guidelines may restrict price levels, usually by preventing companies from using predatory low pricing to drive competitors out of business and establish a monopoly. Finally, companies need to be careful if they want to set different prices for different customer groups, as this may be...

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