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PRICING: POLICIES AND STRATEGIES


PRICING: POLICIES AND STRATEGIES

                         MEANING OF PRICE

    Among the various components of the marketing-mix of a company, price plays an important role in bringing about product-market integration. According to W. J. Stanton, “Price is the amount of money which is needed to acquire a product.” In simple terms price may be defined as the value of product attributors expressed in monetary terms which a consumer pays or is exposed to pay in exchange for a product or service. No business transaction is complete unless the price is determined by a company and accepted by the buyers. It is price which serves the interest of both seller and buyer.

                 CHARACTERISTICS OF PRICE

              The meaning of price can be understood in a better way by knowing the main characteristics and role of price. The important points in this regard are:

1. Price is the value of a product or service exposed in monetary terms.

2. In the free market situation, It is a result of demand and supply position of a product in the market.

3. Price offers a link between company and consumers. A marketing company offers the product at a price and the consumer, if he is willing, purchases the product at the notified price.

4. Pricing is a managerial activity. It involves various managerial tasks e.g. determination of pricing objectives, identification of factors affecting pricing decision, ascertaining their importance and relevance, selection of a method of setting price.

5. The price of a product is an important tool in the hands of management of a company to regulate the demand for its product.

6. Price is also fundamental regulator of the total economy. The market price of products influence wages, rent, interest and profit. Higher wages attract labor, high profits attract new investment. Thus, price is a basic regulator of the entire economic system.

7. Price is an important component of “4 ps” of the total marketing-mix of a company.

8. Price plays an important role in bringing about product-market integration.

9. Price can be used as an important instrument by a company to achieve its marketing goals and objectives. Price plays a vital role in the positioning of a product’s image and favourable public opinion.

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