Pricing, People, Process and Physical Evidence
Price is the amount that the consumer pays for a product or service. Pricing decisions are influenced by a range of factors such as the costs to make the product, transport and warehousing and the perceived value of the product in the eyes of the consumer.
When setting prices, the company sets out to generate revenue and make a profit from selling a product. Marketers need to set prices at a level that is not too high – as customers may not want to buy the product, or too low – as the company may not derive profits from the transaction. When setting prices, the marketer has many things to consider. For example, if the product is new to the market, consumers may be wary and will therefore do a lot of price comparisons with similar products in the market before buying.
It is much easier for consumers to compare prices through the internet and websites like PriceCheck before purchasing and due to tougher economic times, consumers generally are more price sensitive. Another example is when the company competes with low priced and generic brands such as Pick n Pay No Name Brand products.
Also, of concern is that sometimes competitors lower their product prices with the aim of selling more products in order to increase market share. Because price setting is such a complex task, the marketer should follow a proper process. In this course you will learn the process of price setting, some pricing methods and how to determine the final price for its product.
These methods include customer value-based pricing, cost-based pricing and going-rate pricing. You will also learn about various issues that the company needs to consider during the pricing process, including; the company’s pricing objectives, determining the demand for the product, determining the cost to produce, transporting and selling the product and understanding what competitors are charging for similar products.
In this course we also introduce you to the additional service P’s that have been added to the marketing mix to better cater to the needs of a digital customer. These additional P’s include People, Process and Physical Evidence.