MGMA01H3 Chapter 11: Chapter 11 Marketing.docx
Document Summary
Price the amount of money charged for a product or service, or the sum of the values that customers exchange for the benefits of having or using the product or service. Price is the only element in the marketing mix that produces revenue; all other elements represent costs. Frequent problem is that companies are too quick to reduce prices to get a sale rather than convincing buyers that their product"s greater value is worth a higher price. Pricing is sometimes too cost oriented rather than customer-value oriented. Customer perceptions of the product"s value set the ceiling for prices, while product costs set the price floor for products. Pricing decisions, like other marketing mix decisions, must start with customer value. Effective, customer-oriented pricing involves understanding how much value consumers place on the benefits they receive from the product and setting a price that captures this value. In many cases, this has involved introducing less-expensive versions of established, brand-name products.
