What Is the Role of Price in the Marketing Mix?

Price marketing refers to setting reasonable prices based on market demand and stimulating market sales by appropriately reducing product prices.

Price marketing

Price marketing is an important part of the corporate marketing mix. Whether the price marketing strategy is reasonable is not only related to the sales of the company's products and the realization of profit goals, but also directly related to the vital interests of consumers. At present, domestic market demand is sluggish and market competition is intensifying. Various types of companies are trying to implement price marketing strategies in order to occupy a favorable position in the competition, but it is worrying that many companies Into various misunderstandings.

1. One-sided exaggeration of the role of price in marketing.

Many companies believe that low-priced products must sell well. Therefore, in the face of fierce market competition, it is not to do everything possible to improve the technical level of the enterprise, pay attention to the promotion strategy, only focus on the competition in the market price competition, blindly playing the price card. Practice has proved that if an enterprise does not have a marketable product and a good overall marketing plan, a single price strategy will make it difficult for the enterprise to achieve the marketing goal.

2, no degree of price auctions.

Price-cutting products can be found everywhere in China: seasonal and seasonal clothing price cuts, no seasonal cosmetics, daily necessities, home appliance price cuts, food price cuts, and building materials products are competing to drive down prices. This phenomenon of excessive price reduction violates the law of value and misleads supply and demand in the market. Excessive price cuts can cause damage to businesses and consumers. Many small and medium-sized enterprises forced to participate in price reduction competitions have to reduce the quality of products and services to reduce costs, often directly harming the interests of consumers. In some industries, due to inexhaustible price cuts, enterprises not only cannot expand reproduction, but also face severe tests for survival.

3. The price is too high, and the quality is judged by price.

For some famous, special, excellent and new products, when the market demand is strong, appropriate "high price strategies" can be adopted to increase revenue, but some merchants often bear the consumer's affordability and ability to pay when new products are listed Insufficient understanding and over-pricing lead to inadequate sales, resulting in corporate losses. There are two situations here. The first is the high price, which does not mean high quality. If consumers try your new product and feel that quality and price do not correspond, they will not go back to buy. Second, even if the product is of good quality and high specifications, it is necessary to understand the demand and consumption power of the target market.

4. "Hanging price" sales.

In some markets, you will find that whenever a business is concluded, its asking price will be double or even several times higher than the transaction price. This "hanging price" phenomenon has appeared in some places in production, circulation and consumption. Manufacturers buy raw materials from the "hanging price" market, produce products, and then sell it in the "hanging price" market. At the same time, raw materials were repurchased from the "hanging price" market. In this way, "hanging prices" will permeate the entire process of reproduction, forming a vicious circle. There are great disadvantages in "hanging prices" sales, which creates a buyer's distrust of sellers. Consumers are often afraid of selling prices and fear You are deceived and are afraid to buy it casually. This mistrust of merchants actually affects product sales.

1. The complementary portfolio pricing strategy is a way out.

The so-called complementary products refer to commodities that can only be consumed if they complement each other. Among the complementary products, the products with high value and long service life are the main parts, and the products with low value and short service life and need to be frequently purchased are the secondary parts.

The most typical pricing strategy for complementary products is to set the main product at a low price to greatly increase the competitiveness of the product; and to set the secondary product at a high price to make up for the profit lost by the low price of the main product and make the entire product portfolio obtain Greater economic benefits. Such as Bausch & Lomb contact lenses in the United States,

Enterprises deliberately set the contact lens lenses at low prices, and repeatedly lowered prices, making Bausch & Lomb glasses very attractive, and consumers followed. When you buy contact lenses, you must use special disinfectants, cleaners, storage solutions, etc., and these supplements for main components are set at high prices.

There is also a special case in the complementary product pricing strategy, that is, the manufacturer uses the main part as a cover, and it is a stance to attack; but its "fist product" is a secondary part, mainly profiting from the secondary part. Once the sales of the main parts drive the sales of the second parts, the manufacturers can even give up the production of the main parts. For example, in the early 1960s, Kodak Corporation was eager to expand the capacity of the film market, and suddenly announced that its patented automatic camera can be copied by any manufacturer. For a time, many manufacturers flocked to produce automatic cameras, and the camera boom naturally brought a boom in the film market. Although Kodak film is expensive, it is spread all over the world and has become the first brand in the film manufacturing and sales market.

2. Psychological promotion pricing strategy is a trend

Psychological promotion pricing is a strategy that sets the corresponding product prices to meet the needs of different types of consumers in accordance with the different consumer psychology of consumers.

The methods of consumer psychological promotion pricing are as follows:

(1) "Money Illusion" Strategy

Aiming at the purchase psychology of "price reduction is not good", Japan's Mitsukoshi Department Store uses the "money illusion" to implement the "100 yuan to buy 110 yuan merchandise" sales technique, which in the first month increased 200 million yen. This is an extraordinary discount.

Generally, people like to use the discount method. For example, "100 yuan sells 90 yuan" is a nine-fold discount method, and its intuitive response to consumers is to cut prices for sale. And "100 yuan to buy 110 yuan of goods" is actually a kind of "steal the bar and change pillars", but it has caused people a psychological value of money. On the surface, both seem to have a 10% price difference. In fact, "100 yuan for 110 yuan" is about 1% more profit than a 10% discount.

(2) Prestige pricing strategy

This is a further development of the integer pricing strategy. Consumers generally have the mentality of seeking fame. According to this psychological behavior, companies will set prestigious products at higher prices than similar products in the market, which is the prestige pricing strategy. It can effectively eliminate the psychological barriers to purchase, so that customers have a sense of trust and security in the product or retailer, and customers also get a sense of honor from it. For example, when Microsoft's Windows98 (Chinese version) entered the Chinese market, it was initially priced at 1998 yuan, which is a typical prestige pricing. Suits, dresses, ties and other goods used for formal occasions, and consumers who serve the professions such as corporate presidents, well-known lawyers, diplomats, etc., should use prestige pricing, otherwise these consumers will not buy.

This pricing strategy is generally adopted by those with high reputation and well-known brands.

(3) Custom pricing strategy

For some products, the value is not high, but consumers must buy frequently and repeatedly, and the prices of such products are "accustomed to nature" and accepted by consumers. When pricing such products, enterprises must fully consider this habitual tendency of consumers. They cannot change prices at will, and they should set prices in accordance with the prices of similar products in the market. Otherwise, once consumers' long-term consumption habits are destroyed, they will cause dissatisfaction and lead to the transfer of purchases. If you really need to adjust the price, you should do a good job in advance to allow customers to fully demodulate the price, make the price acceptable to consumers, and then adjust the price.

(4) Minimum unit pricing strategy

It refers to an enterprise that packages the same kind of goods in different quantities and sets the base price with the minimum packaging unit quantity. When selling, it refers to the base price of the minimum packaging unit and the amount charged. Generally, the smaller the packaging, the higher the price of the actual unit quantity of goods, and the larger the packaging, the lower the actual price of the unit quantity of goods. The advantages of this strategy are:

First, it can meet the needs of consumers in different occasions, such as 250 grams of wine is very convenient for tourists.

Second, it takes advantage of the consumer's psychological illusion, because the price of small packages makes people think cheap. In real life, consumers are reluctant to worry about converting the price of goods in actual weight units or quantity units. For example, for higher quality tea, this pricing method can be used. If a certain tea is priced at 150 yuan per 500 grams, consumers will feel that the price is too high and give up the purchase. If you reduce the pricing unit and adopt a pricing method of 15 yuan per 50 grams, consumers will feel that they can buy it and try it. If this kind of tea is packaged and priced at 125 grams, consumers will find it troublesome and will not be able to calculate how much it should cost per 500 grams, so it will be impossible to compare whether the price of this tea is too high Still low.