PRICE (MARKETING MIX)

PRICE

 Price stands for the amount of money customers have to pay to obtain the product. Necessary strategies pertain to the location of the customers, price flexibility, related items within a product line and terms of sale. The price of a product is its composite expression of its value and utility to the customer, its demand, quality, reliability, safety, the competition it faces, the desired profit and so on.

In an industry there would be organizations with low cost products and other organizations with high costs. The low cost organizations may adopt aggressive pricing strategy as they enjoy more freedom of action in respect of their prices. They may also afford selective decrease in price to push their sales.

Theoretically, organizations may also adopt cost plus pricing wherein a margin is added to the cost of the product to determine its price. However, in the competitive environment such an approach may not be feasible. More and more companies of today have to accept the market price with minor deviations while fixing the prices of their products. They reduce their cost in order to maintain their profitability.

For a new product pricing strategies for entering a market need to be designed.

In pricing a really new product at least three objectives must be kept in mind.

•  Making the product acceptable to the customers. 
•  Producing a reasonable margin over cost. 
•  Catering to a market that helps in developing market share. 

For a new product, an organization may either choose to skim or penetrate the market. In skimming pricing policy, prices are set at a very high level. The product is directed to those buyers who are relatively price insensitive but sensitive to the novelty of the new product. For example, call rates of mobile telephony were set very high initially. Since the initial off take of the product is low, high price, in a way, helps in rationing of supply in favour of those who can afford it. In penetration firm keeps a temptingly low price for a new product which itself is selling point. A very large number of the potential consumer may be able to afford and willing to try the product. The pricing kept by Reliance Jio is penetration.

 http://www.comgurukul.com/educational-books/gst-book/

GST (Goods and Services Tax) Book -A student friendly Latest and Updated Best GST Book - Bharat Gurukul
GST Student friendly Book most relevant/Useful for CA Intermediate/IPCC, CS executive , CWA Intermediate