Price is the amount of money asked or given for “something”. Price has different names: a lessor calls it rent, schools call it tuition, employees call it wages, banks call it interest, lawyers and doctors call it professional fee, even fixers call it “consul-tancy fee”. Pricing is the twin component of product quality which when combined make up what is called product value. It is also the twin the twin element of sales volume which when combined make up sales revenues
Function of Price to many customers
Pricing has the dual marketing function of making oroducts affordable to its target market and at the same time, reflecting the value of the product. Therefore, the price charged for a product or service, should be no more than the sum of the values of the benefits it provides to customers. For example you can eat a cheap lunch in a karinderia for P35.00 but your lunch may cost 5 times more in a fine dining restaurant as it reflects the value of the product because of the ambience of the restaurant.
How can you make the price of a product affordable and attractive to many customers? Some firms offer installment plans like: 1. By direct sellers of consumer durables example water purifiers. 2. By firms in franchising like Jollibee and Mercury Drug thus accelerating the growth of the number of their stores. 3. By retailers like SM Appliance stores using credit cards to make their products more affordable by way of no interest over 3 to 12-month installment periodically.
Pricing strategy can be defined as “a reasoned choice from a set of alternative prices (or price schedules) that aim at profit maximization within a” planning period in response to a given scenario” (Gerard Tellis, 1936). For example Philippine Airlines and Cebu Pacific Air have different pricing for early booking and walk-in passengers where rates are much lower when flights are booked way ahead of time.
At present pricing is a significant means for business...