Wednesday, January 20, 2010

Pricing Strategy Article: Making Sure The Price Is Right

Pricing is an often overlooked component of marketing's four p's. Here, the author discusses pricing as it relates to customer delivered value as well as considerations when lowering prices.


Price, one of the Marketing Mix’s “Four Ps”, is an often-misunderstood weapon in the marketer’s arsenal. Too often, small- and medium-sized enterprises rely on Price to carry the weight for its “little brothers” - Product, Place, and Promotion - in the firm’s marketing battles. This is because of many firm’s misconception that they have little choice but to make sure their prices are comparable to those of the competition. Of course, a price that is way too high may simply make the product unaffordable. On the other hand, a low price provides little opportunity for new product development, expanded product placement, or creative promotional initiatives. As a result, once they start down the price spiral, firms often perceive the necessity to compete on price alone. This couldn’t be further from the truth.

The truth is that Product, Place, and Promotion are marketing weapons at least as valuable as Price. The trick is to learn how to use them well.