Marketing automation pricing
Macroeconomic theory for more than 150 years, stemmed from the fact that on the sale of goods can be influenced only by means of prices. Reassessment of this feature due to the fact that at the time of Adam Smith and David Ricardo made mainly raw materials and consumer goods are homogeneous and not used ways to diversify products and attract customers with packaging, brand and advertising. One of the few opportunities the job competition was just a change in prices. On the other hand, consumers in the purchase and focus primarily on the price, as the average income was then very low.
Another reason for the concentration of professional interest on the price of the product may be in the fact that the price is a purely quantitative, dimensional size and easy to operationalize. Because of this it is much easier to use in the models of supply and demand, rather than the complex characteristics such as the quality of the product, its image and influence of advertising.
The classical model of supply and demand is shown in Figure 1, where P - the price, and K - the amount purchased / manufactured goods.
As can be seen from the figure, the demand when prices fall, and the proposal - is growing. Here evident conflict of interests manufacturer and the buyer. Manufacturer through the price gets information about the extent to which society needs its products. And if the level of prices prevailing in the market, the manufacturer reimburses costs and provides the desired profit, it is the surest sign, the production of and compliance with its demands.
Feature of the competitive market is that when a certain number of products offered by it as if by itself tends to equilibrium. Suppose that the manufacturer offers his goods at a price above the equilibrium point (the point CR). Customers consider the price too high, so a certain amount of production is not implemented. In this case, there is a surplus of supply over demand. The market oversaturated with this product and the manufacturer is forced to reduce the price in order to eliminate the excess of unsold products. At the same time decreasing its production, since production at declining prices unprofitable. Price for the supply curve shifts down, but the new price corresponds to more demand, then the price moves up the demand curve. The above process continues as long as the supply and demand is balanced at the CR corresponding price equilibrium. If the results of market research shows that in the near future is expected to increase the demand for a particular product, the manufacturer has every reason to increase its production in the hope of subsequent earnings growth.
However, this pricing model was developed for the markets of perfect competition and is based on a set of assumptions that relate primarily to the number of market participants, their objectives, types of products, etc. (This is dealt with in the section on competition). Meanwhile, many of these assumptions are far from reality.
This model does not take into account what else personal, temporal or spatial preferences. That is, it assumes that the cost of shipping in all cases are the same, and the cost of meeting the needs of line with the market price of the goods (not included the price of consumption). These assumptions, however, do not correspond to reality. For example, the locale does not neutral in terms of benefit to the consumer.
From these considerations it follows that the pricing policy is understood in the broadest sense, and the recommendations of the theory of equilibrium prices can only serve as a general guideline in the process of price formation.
As one element of the marketing mix, price is used heavily in the development of marketing policy. In this case, if the change in food policy, planning and implementation of activities to promote products, creating new channels of goods require a very long time, in response to changing internal and external opportunities and conditions prices are subject to change pretty quickly.
Price plays an important role in marketing and because it has a direct effect on the resulting economic performance. Thus, the profit (P) is defined as
F = (C * V) - C
where P - the price;
V - volume of sales;
N - the total cost.
In addition to the price earnings actively influences the volume of sales, in the measure of market share to such final financial results as the return on investment, etc. As a rule, the organization is not guided by obtaining immediate benefits, realizing the product at the highest possible price, and flexible pricing.
An essential role for the price of the competition. Product on the market can compete both on price and not on the basis of price.
Price competition - this competition by changing commodity prices. Usually these resorting to lower prices. However, compared with the competitors must have lower overall costs. Before announcing a "price war" should be very carefully evaluated the stock of "economic stability" at itself and its competitors. Otherwise, it is possible that unleashed a "price war" in it and play the "price war" - is a difficult and sometimes ruinous. If competing organizations are approximately equal, then the "price war" is not just wasteful, but also pointless.
When the role of non-price competition, prices did not decrease, but in the foreground properties of the goods, the prestige of its brand, service level, and other environmental factors in the product. Selection of the most successful policy moves in the sphere of sale of goods and there effect on the efficiency of markets. If the full potential of non-price competition organization aimed at creative direction and is not destructive, as in the case of a "price war."