Management
faces two types of pricing decisions. New products must be priced, and the
prices of existing products must be adjusted in the face of competitive, cost
and market conditions. Pricing strategies, particularly for new products, are a
high level responsibility shared by marketing and other executives. Pricing
usually involves more executives form marketing and sales than other corporate
areas, but these executives share the responsibility for pricing with other
high level executives.
Price is
often used to enhance the image of a product, it increase sales through
discount pricing, or in combination with promotion, to build future sales.
Price is used in different ways by different companies, depending on the role
it plays in the overall marketing program. Determining the role that prices
should play relative to other marketing mix variables establishes important
boundaries and guidelines for pricing decisions.