Page 22 - MARKETING MIX
P. 22
PRICING
Internal Factors :
Marketing Mix Strategy
Price is the only marketing mix instrument which is used by
a firm to achieve its marketing objectives. Thus, the pricing
decision has to be in-line with the product design,
distribution, and promotion. This is important to develop
marketing programmes that are effective and consistent.
Internal Factors :
Decisions made for the other elements in the marketing mix
may leave an impact on the pricing decision.
Cost
Cost is an instrument used by a firm to fix the product’s
floor price/minimum price. The company will choose a
price that will be able to bear the overall production cost,
distribution, and product sales including sufficient profit
to be used as the turn over capital for the company.
Fixed cost, variable cost, and total cost are the types of
costs that influence the pricing of a product. Fixed costs
are costs that do not vary with production or sales
revenue. Variable costs are costs that vary directly with
the level of production. Total cost consists of the sum of
the fixed and variable costs for any given level of
production.
Price and cost are relative—one entity's price may be
another's cost.
16
