The Marketing Mix: Price, Case Study Example

Introduction

Marketing mix comprises of four elements which include price, product, promotion and distribution of the product. Price being one of the components of marketing mix is explained as the value given to a product whether a good or service. It is not only the money value but also the satisfaction associated with the product. In business the entrepreneurs have different pricing goals for their products mainly covering basic costs (Kenneth E. Miller, Roger Alexander Layton 1999). Price is related to the other components of marketing mix although of all of them it is the only component which generates income, for instance promotion increases the demand but directly leads to increasing the cost, distribution is also an expense and shoots the costs up, and to get the product itself ready is also a cost. Generally pricing goal will depend on the company’s policies

Some of the other pricing goals that a company may consider include profit oriented goals, sales oriented goals this may target market share, competition among others

Factors

In this case the product of the company at first was priced at $359 although they finally dropped the price to $300.The price of the product might have been affected by factors like low demand which eventually led to lowering the prices(Philip Kotler, Gary Armstrong, 2008). Factors considered when determining the price of a product include:-

• Profit: The firm should try to fix a price at level which will be above the breakeven point if it is aiming at making profits
• Market demand: Before deciding the price the firm also tries to consider the demand of their product, if the demand of the product is high the price will be high as compared to when the demand is low.
• Industry standards: the company should try to know how the other firms are charging for the same product This might help the company to know what other firms are offering which will enable them to lay distinct strategy
• Nature of the clients: mostly the prices of products vary with clients of your product.
• Costs: when determining the price you should aim at setting a price which will cover all the basic costs of the product.
• Business strategy: if the firms strategy is being cheap or making the product affordable and reaching a wide market the price will be made cheap if on the other hand the company’s sets its price at high rate then prices will be made expensive.
• Service offered by firm: the company should also consider the services that they give to the clients adjusting the price according to the level of the service they give to customer are good.

Generally the firm should consider thinking widely and being careful before making any price for commodity putting in mind all the factors and striving to reach at an equilibrium price which will be favourable to both parties that is the consumer and the supplier.

Determining future price

To determine the best price to charge the product will generally require a lot of thinking. Due to the past experience the company should aim at making a price where it will be maximizing their goals it should also consider the demand of the product in question. From this case it is evident that the first commodity’s price was not at equilibrium, making the firm to eventually reduce the price. Although the firm should set the price to cover the costs of the commodity wholly and make profit, it must also consider the market of the product (Pascale Quester, Robyn McGuiggan2006). The price should be set at an equilibrium point, in my opinion I would recommend the price of the first product to be $300. The price of the product will depend on the market after setting it at a price of $400; if the price is at equilibrium then it will be advisable to set the price at that point.

Works Cited

Kenneth E. Miller, Roger Alexander Layton; Fundamentals of marketing. New York: McGraw-Hill, 1999.

Pascale Quester, Robyn McGuiggan, Business & Economics advertising & Promotion. California: 2006

Philip Kotler, Gary Armstrong Principles of marketing. California: Pearson/Prentice Hall, 2008