One of the four major elements of the marketing mix is price. It is one of the four P's. Price, Product, Promotion and Place, or where the product is distributed.
The price is a very significant factor in determining the other elements of the marketing mix. Price determines the consumer group that will be targeted, as well as the advertising and promotion and distribution.
Pricing structure must take into account not only the cost to produce the product which includes materials, time, labor, overhead. But, must also consider the competition's price, and potential legal matters that may arise with the product.
New products are often priced at what is known as penetration pricing, which is an attempt by a company to capture a share of the market. This is often a lower price to draw customers away from the competition.
There are other pricing strategies used in marketing, it all depends on the product, the target market, the competition, the product's life cycle and the firm's expectation of expansion and distribution of the product.
For greater detail on pricing, click on the link below.
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