By Alexander Gordon
It seems like everything has been taken into account: the importance of an efficient marketing plan has been fully recognized; the search for a suitable marketing planner or software has already begun; the concerned resources are in place. The time frames have been worked out and competition analysis is already taking shape. Target identification, product dimensions, campaign management and communication planning are all in place. However, has anything been left out? Well, yes. A clear pricing strategy has been sidelined. The enthusiasm and positive energy directed toward the success of your marketing plan could be all for nothing due to the lack of careful price management.
The price or marketing retail price (MRP) or sales price, whatever you want to call it, is the sum of money you get when you sell a product. This sole factor, along with its result, i.e. profit, determines your survival. Charity is great, but business and management is no place for altruism. At no stage should your long-term expenses exceed the firm’s earning capacity. The only way to survive in business is by earning a profit. This fact implies a diligent look into the pricing strategy while designing the marketing plan.
Pricing and Marketing:
The link between the two terms is quite strong. The price of your offerings decides the level, type and scope of your marketing initiatives. The prices in and of themselves are dependent on various factors, the lower end being your cost and the upper end being the consumer’s willingness to pay.
Setting up a price acts as an important indicator of the firm’s marketing objectives. For instance, setting prices equal to your competitors, referred to as competitive pricing, is a part of the overall marketing strategy to curb competition. Similarly, an exceptionally low price in a specific area or segment to capture the bulk of the market share is a key component of a penetration strategy. A reliable and an economical product calls for less marketing attention, while a high-end, high-priced product meant for a niche market demands a carefully designed marketing plan to back it up.
The correlation among the two terms, though not directly visible, is so strong that any decision in one department can not be isolated from any other. Budgeting, an important component in devising the marketing plan, also takes into account the earnings and eventual profits earned by a firm, which in turn depend upon the pricing strategy.
Pricing strategy and marketing planning go hand in hand in any organization. Neither can be devised or revised in isolation. A minor change in one implies a corresponding change in the other. It is impossible to ignore the pricing aspect while implementing a marketing plan, and vice- versa. A clear price definition and cost estimation assist in making more practical marketing plans, which in turn help achieve the planned profits for a firm.
Alexander Gordon is a writer for http://www.smallbusinessconsulting.com – The Small Business Consulting Community. Sign-up for the free success steps newsletter and get our booklet valued at $24.95 for free as a special bonus. The newsletter provides daily strategies on starting and significantly growing a business.
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