Marketing Mix> Pricing

• Price is the amount of money paid by a buyer or received by a seller for a product or service.
• Examples: transport fare, insurance premium, doctor's fee.

• Every product needs a price.
• Price acts as a regulator of demand: a higher price leads to lower demand, and vice versa.
• Price is a key competitive weapon.
• Price is a determinant of revenue and profits.

Product Cost

• Types of cost: fixed cost, variable cost, semi-variable cost.
• Total cost = sum of fixed, variable, and semi-variable costs.
• Cost acts as the floor (lower limit) price; profit margin is added above cost.

Utility and Demand

• Utility and intensity of demand set the upper limit of price.
• Based on the law of demand.
• Price must balance the interests of both buyer and seller.

Extent of Competition

• More competition pushes prices towards the lower limit.
• Competitors' prices, quality, and features must be considered.

Government and Legal Regulations

• Government can declare certain goods as essential commodities and regulate their prices.
• Especially relevant where firms have monopoly power (illustrated with a drug pricing example).

Pricing Objectives

• Short-run profit maximisation vs long-run profit maximisation.
• Gaining market share leadership: achieved through lower prices.
• Surviving in competitive markets: achieved through discounts/promotions.
• Product quality leadership: higher prices charged for high-quality, R&D-intensive products.

Marketing Methods Used

• Distribution system
• Sales force quality
• Advertising
• Sales promotion
• Packaging
• Product differentiation
• Credit facilities
• Customer service
• These elements affect price flexibility and positioning

• Price is the money exchanged between buyer and seller for a product/service.
• Pricing regulates demand and acts as a competitive and revenue-determining tool.
• Cost sets the price floor; utility/demand sets the price ceiling.
• Competition intensity pushes prices lower.
• Government regulation can control prices, especially under monopoly conditions.
• Pricing objectives (profit, market share, survival, quality leadership) shape price levels.