Question

Why is the marketing strategy so important to the pricing decisions? Can you think of an example in which the strategy and pricing decisions are inconsistent?

Answer 1

Price is one of the four Ps of market mix that helps in forming the marketing strategy which means that marketing strategies are formed on the basis of these four Ps- Product, Price, Promotion and Place. The marketing stratgies are formed to sell the product to the customer satisfying his demand and giving growth to the company from its sales. Hence prices set should be keeping both these points in consideration.

Pricing decisions are one of the most crucial and complex decisions of bringing a product in the market. The price being higher can leave a negative impact on the customer about buying the product to try it and price being lower can degrade the product value in the further competition. Hence the marketing strategies should be alinged in such a way that they serve the best purpose in setting the pricing decisions keeping the other factors into consideration such as costs, demand, competition, governmental laws and regulations and economical conditions.

Inconsistency in pricing decision faced by businesses is a common issue these days due to factors like increased price sensitivity of customers, price agresiveness of competitiors, protecting price image of brand and price transparency. One example where the pricing decisions vary with the channels and customers is airlines business. The tickets prices vary from one channel to other and also provide offers and discounts on booking from particular channels. Customers do not rely on booking from the first channel and instead browse on all the different channels that provide various prices and choose the least one. Such inconsistent pricing stratgies are used in amny such businesses where pricing of the product differs for individual customers or a segment of customers who can be attracted by pricing strategies.