Price, the Only Revenue Generator
Read this chapter for a thorough treatment of the critical concept of price, which the authors note is the only means a company has of generating revenue. This chapter discusses the process companies must go through to effectively price their offerings, including identifying pricing objectives, accounting for the factors that affect pricing decisions, and implementing a pricing strategy. Pay attention to concepts of pricing basics, value pricing, target pricing, price sensitivity and elasticity, dynamic pricing, rack pricing, and loss leaders.
Factors That Affect Pricing Decisions
KEY TAKEAWAY
In addition to setting a pricing objective, a firm has to look at a number of factors before setting its prices. These factors include the offering's costs, the customers whose needs it is designed to meet, the external environment - such as the competition, the economy, and government regulations - and other aspects of the marketing mix, such as the nature of the offering, the stage of its product life cycle, and its promotion and distribution. In international markets, firms must look at environmental factors and customers' buying behavior in each market. For a company to be profitable, revenues must exceed total costs.