In this chapter, we begin a two-part discussion of the pricing component of the Marketer’s Toolkit. We start by defining price and see how it has a different meaning for different parties to a transaction. We next look at why price is essential to marketing and to the organization. Finally, considerable attention is given to the internal and external factors that influence pricing decisions.
- What is Price?
- Importance of Pricing
- Internal Factors Affecting Pricing Decisions
- External Market Factors Affecting Pricing Decisions
- Changing price can also be a highly automated process in which computer programs evaluate multiple variables and then instantly alter the price. This method is best represented by ridesharing service Uber and its surge pricing method. For more, see Dynamic Pricing in Chapter 18.
- A recent example of a price war occurred during the coronavirus pandemic when oil prices experienced a significant drop in demand and led to tensions between oil producing countries as discussed here: “2020 Russia–Saudi Arabia Oil Price War.” Wikipedia. https://en.wikipedia.org/wiki/2020_Russia%E2%80%93Saudi_Arabia_oil_price_war.
- “Leegin Creative Leather Products vs. Psk Inc.” United States Supreme Court, June 28, 2007. https://www.supremecourtus.gov/opinions/06pdf/06-480.pdf.
- For more on laws impacting deceptive pricing in the U.S. see: United States Code of Federal Regulations, Title 16 Subchapter B – Part 233. https://www.ecfr.gov/cgi-bin/text-idx?SID=35d609bbdeebd8f2ca771df0b5364f58&mc=true&node=pt16.1.233&rgn=div5.