This can be defined as what must be sacrificed or given up by one party in an exchange inorder to obtain another item from the other party. Price means a variety of things to a number of people. The first view is the consumers view. He does not just consider price in monetary terms i.e. what he must pay to get a good or service, but he also considers the time he has to spend to fully utilise the product. This implies that all the trouble he has to undergo before he can derive utility from the product is considered as a price. While the seller considers price in a positive sense in that it is a reflection of the amount of revenue he is getting. It is also seen as a prerequisite to profit. It is also an important marketing aid for organisations. This is because marketers can use their prices as a tool to advertise or promote their wares.
There are a number of factors that need to be considered by the marketer when making pricing decisions. This is because it is not just the final consumer who will make contact with his product. Taking an example of a book sold online - the publisher must consider wholesalers, retailers and even resellers because these groups of people will substantially affect his final income. (Hunger, 2003)
The main idea behind any price decision is to strike a balance between satisfying th ...Show more