Lesson-1-Introduction-to-Pricing-as-part-of-the-Marketing-MIx.pdf

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St. Nicolas Collegeof Business andTechnologyBSBA MAJOR IN MARKETING MANAGEMENTPRISTRA: PRICING STRATEGYIn this chapter, we will describe the business context for pricing and provide an overview of howthe basic principles of marketing can guide effectiveprice setting.THE COMMERCIAL EXCHANGEAlthough people often think of marketing as synonymous with advertising orsalesmanship, it is actually much broader. Marketing consists of the full range of activitiesinvolved in facilitating commercial exchanges and having all of these activities be guidedby a concern for customer needs.The central idea here is that of thecommercial exchange(see Figure 1.1). This iswhere a seller provides a product to a buyer in return for something in exchange (usuallyan amount of money). The product could be something tangible, which is referred to as agood, or the product could be the result of human or mechanical effort, which is referredto as a service. The buyer could be a consumeran individual who purchases a productfor his or her own useor the buyer could be a business customeran individual or groupwho purchases the product in order to resell it or for other business purposes.Figure 1: The Commercial ExchangeOne aspect that makes the commercial exchange a very important idea is that it describesan interaction that is voluntary. Both the buyer and seller participate in the exchangevoluntarily because the exchange will lead them both to be better off.In a society where the distribution of most goods and services is governed by afree-market economy, every person engages in numerous commercial exchanges every day.Each little increase in pleasure that a commercial exchange brings is then multiplied manytimes, and the societal benefits can become considerable.WHAT IS A PRICE?From this understanding of the commercial exchange, we are now able to give a formaldefinition of a price:that which is given in return for a product in a commercialexchange.This essential role of price in commerce is sometimes disguised by the use of traditionalterms. If the product in the commercial exchange is a good, then the product’s price will
St. Nicolas Collegeof Business andTechnologyBSBA MAJOR IN MARKETING MANAGEMENTPRISTRA: PRICING STRATEGYmost likely be called “price.” However, if the product is a service, then the product’s pricemay well go by one of a variety of other possible names (seeFigure 1.2).Figure 1.2: Some Terms used to mean “Price”“Price” Versus “Cost”Although a price may go by many names, one name it should not go by iscost.This is because,in this book, we will usually be taking the viewpoint of the seller.PRICING AS A MARKETING ACTIVITYMarketing activitiesare those actions an organization can take for the purpose of facilitatingcommercial exchanges. There are four categories of marketing activities that are particularlyimportant, which are traditionally known as the four elements of themarketing mix:Product

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Term
Fall
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Tags
Marketing, St Nicolas College, effective price setting

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