7.Marketing Mix -
Price
As has been already stated in, price is one of the
four Ps in the marketing mix and is yet another weapon in the marketing
armoury. The price you decide to charge for a product or service can support
its positioning. Likewise a pricing which appears to be out of synchronisation
with the product and with the other marketing elements will only confuse
customers and hence lead to lower sales.
A situation I commonly encounter is
where a company bases its selling price on the cost of the product plus an
internally agreed percentage or margin. This calculation is done irrespective
of product or market sector or customer perceived value. 
This means that some products are priced too
expensively and hence never generate the volume they should, and some products
are priced too cheaply and never generate the volume or profit they should.
Also be aware of the salesman's anecdotal
evidence that price seems to be the only factor that a customer considers in
making a purchasing choice. A huge amount of research has been done on this
subject. Whereas the salesman will generally place price as the number 1 factor
in a list of factors such as delivery, service backup, functionality, etc;
customers will place it as only the number 3 or number 4 factor.
The production of good sales presentation
material can help enormously here in that the salesman can be guided to promote
other positive aspects of the product or service on offer and hence build up
its perceived value to customer. If there is no attempt by the company to
influence the sales story then invariably it will be driven by the customer and
this can lead very quickly to a debate on price and nothing else.
To take this argument a little further it is
quite possible to sell exactly the same product to two different customers and
charge radically different prices. This is simply because the customers operate
in different market sectors and value the product quite differently. 
Do you have a clearly defined and written pricing
policy?
I am always surprised by the number of companies
who do not seem to have thought through all eventualities and decided how to
charge for the various scenarios. A well thought through strategy can give you
the ability to sell the same products at vastly different prices to different
market sectors without upsetting any of your customer base.
Is your product a loss leader? By offering a
product at a greatly reduced price you can generate a lot of interest from
customers in a relatively short period of time and give yourself the
opportunity to generate more business from those customers in the fullness of
time. It can even be worth your while to make a loss on this product.
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