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Marketing Basics - Kotler Philip

Summary

Despite the increasing role of non-price factors in the process of modern marketing, price remains an important indicator, especially in the markets of monopolistic and oligopolistic competition.

Pricing a product is a six-step process. 1. The company carefully defines the goal or goals of its marketing, such as ensuring survival, maximization, current profit, gaining leadership in terms of market share or product quality. 2. The company draws a demand curve for itself, which indicates the probable quantities of goods that can be sold on the market for a specific period of time at prices of different levels. The more inelastic demand, the higher may be the price set by the firm. 3. The company calculates how the sum of its costs varies at different levels of production. 4. The company studies the prices of competitors to use them as a basis for the price positioning of their own goods. 5. The company chooses for itself one of the following pricing methods; “Average costs plus profit”; breakeven analysis and target profit; pricing based on the perceived value of the goods; pricing based on current prices and pricing based on closed tenders. 6. The company sets the final price for the product, taking into account its most complete psychological perception and with a mandatory check that this price complies with the pricing policy of the company and will be favorably received by distributors and dealers, its own sales staff, competitors, suppliers and government agencies.