Why Marketers Should be Careful About Pricing of Products?

Price is the critical element of the marketing mix which determine the sales and profitability of the business organization. Firms have to observe utmost care in pricing decisions to avoid over pricing and under pricing of the products. Pricing is the process of determining the reward for a company in exchange for its products. It is defined as entire activities involved in fixing the selling price of a product. Price is considered as the most flexible element of the marketing mix. Unlike product, place and promotion, price can be changed very rapidly in order to adjust with the changing market conditions.

The main objectives of pricing are to maximize long term- short term profit of the company and to increase the volume of sales. It also increases the market share of the company and also prevents the entry of new firms in the industry. Thus, it is a powerful tool to fight against the competition. Price is most accessible and flexible elements in the marketing mix to quickly respond to a market situation. For instance, if the sales of the product during a particular period are low, then the firm can boost sales by reducing the price. It is to be noted that adjusting other marketing variables would require a long time compared to price.

Pricing helps to create impression about the product among the customers. Price is considered as the main door to reach a product. Consumers always check the price of the brand they want to purchase. A right price creates good impression about the product in the minds of the customers. In addition, it can be used as a tool to promote sales. Lowering the price of a product for a short period will help companies to attract the attention of more customers and thereby improve their sales.

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