Marketing Notes – Pricing


Basic notes from core MBA marketing course, focusing on pricing issues
Subject: Marketing

Things To Consider

  • Critical issues, pro and con, in adopting a formal or informal pricing strategy
  • Points relevant to a specific pricing strategy
  • Role of pricing strategies and policies in achieving a balanced position

Historical Perspective

  • Pricing based on intuition
  • Theories and concepts largely ignored
  • Studied little
  • Left out of marketing equation

Modern Perspective

  • The final and very important focal point
  • Helps attain other marketing objectives
  • Should be tied to overall business strategy and
  • Supported with a focused plan of implementation

Pricing Enables the Marketer To

  • Segment markets
  • Define products
  • Create customer incentives
  • Send signals to competitors

Role of Pricing

  • Valuable strategic weapon
  • Enhance and capitalize on competitive vulnerability
  • Immediate impact on bottom line

Establishing Pricing Limits

  • Upper bound
    • how to measure this?
    • economic value of product
  • Lower bound
    • frequently cost based
    • average/marginal considerations

Role of the Customer

3 C’s for new product prices

  1. Customer
  2. Company
  3. Competition

Role of the Customer

  • Micromarketing
  • Quality vs price considerations
    • Odd vs even pricing
    • Prestige pricing

Basic Pricing Strategies

  • Skimming
  • Penetration
  • Competitive

Naming a Price

  • Within boundaries
  • Little sensitivity to price
  • Fairness
  • More art than science


  • Pricing is essential to strategy, not an afterthought
  • Integrated framework
    • target market
    • image
    • marketing mix
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