The Impact of Pricing
ID: 1153414 • Letter: T
Question
- Price is the only element in the marketing mix that produces revenue all other elements represent costs.
- How do price decisions affect the other three P’s? Select a product that you regularly buy.
- How does price impact your purchase decision for this product?
- How does it impact your perception of the brand? Does the company’s pricing strategy help build a long-term relationship with you by creating value?
- Why or Why not?
- Remember to include the link to your product of choice in your discussion board response for others to review.
Explanation / Answer
Marketing mix model consists of four P's that are price, promotion,place and product. Other than price all other three P's carries some cost from promoting a product to the place of selling all these p's got some attahced cost to it. Furthermore, Price has the most important impact as it covers both cost and revenue.
Example- Taking a product - L'Oreal Shampoo
According to Demand theory as price increases our demand falls. Thus, here taking the example if the price of the L'Oreal shampoo rises the demand would fall so the purchase of good is highly dependent on the price of the good.
The price of the good determines how big and trust worthy a brand is. Say if the product price is too low it can be perceived that it not that big of a brand as the company is focusing on large sale by keeping it price low. Where as big companies keep in mind their short term as well as long term profits and keep the price as such it is consumed by middle and high class people. LO'real focuses on earning more profit and keeping its product at a cost where it is consumed by middel and high class people.
Yes, company's pricing strategy help build a long term relationship- as providing a good quality product at an accepable price creates value and earns customer trust for long period of time.
Link to the product-
LO'real shampoo
https://www.lorealparis.co.in/products/hair-care/shampoo
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