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Essentials of Marketing 7th Edition

Essentials of Marketing (7th Edition)

Book Edition7th Edition
Author(s)Hair, Lamb
ISBN9780538478342
PublisherCengage Learning
SubjectBusiness
Chapter 16, End Of Chapter, REVIEW AND APPLICATIONS, Exercise 1.1
Page 594

Discuss the importance of pricing decisions to the economy and to the individual firm.

 

Pricing plays an integral role in the U.S. economy by allocating goods and services among consumers, governments, and businesses. Pricing is essential in business because it creates revenue, which is the basis of all business activity. In setting prices, marketing managers strive to find a level high enough to produce a satisfactory profit.

 

Why is pricing so important to the marketing manager?

Explanation

Price is the value which is paid in return for a product or service. Price multiplied by the units sold of a product equals revenue. It is essential for a business to earn sufficient revenue so that it can carry out all business functions. The amount that remains after revenue covers all business expenses is profit. Profit is essential for survival and the primary motive of a business undertaking. A business cannot survive if it makes continuous losses. Thus, pricing is the basis for all marketing functions. If the pricing strategy and the final price set is not optimum, it can lead to losses and failure of the business. 

Verified Answer

Pricing is important to the marketing manager because it is the key to earning revenues which in turn determines the profitability of a firm. Profits are essential for survival of a business. Hene, pricing holds utmost importance. 

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