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 the customer's needs while at the same time making profit for the organisation. It should be remembered that price is proportional to innovation. This is because creativity adds value and thus allows the company to raise its price. Besides this fact, a marketer should also incorporate a company's objectives - what does the company want to gain from sale of a product or service. Allowances and discounts need to be integrated too be cause they cause a substantial decrease in sale of the product. If a product is new to the market, it must have a lower price to lure consumers. This is what is called tactful introductory pricing. In addition, a marketer needs to consider geographical factors when setting his price. The product may have to travel long distances from its place of manufacture. Lastly, prices should be flexible at all times. It must reflect both internal and external market forces and these are very dynamic factors.
Place -distribution channels
Distribution channels include all the people between the consumer and the supplier that are involved in the exchange of services or products. The activities integrated in distribution range from storage, ordering, shipping, promotion, displaying, feedback and selling. In this channelling process there are usually two broad categories i.e. firms specialised in channels and resellers. Resellers are those groups that take over ownership of products from the marketer and sell these to others. Resellers may come in form of a network or may simply be on their own. Examples of resellers include retailers, wholesalers and industrial distributors. Speciality firms provide help with the sale of an item but do not necessarily buy the item. Some of them may be brokers or agents who bring sellers and buyers in concert after a certain charge. Other speciality firms are distribution service firms who help in storage, transportation or other activities that involve