Price Structure and Levels

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Copyright: 2013
Pages: 29
Source title: Marketing Decision Making and the Management of Pricing: Successful Business Tools
Source Author(s)/Editor(s): Dr. Rajagopal (EGADE Business School, Tecnologico de Monterrey (ITESM), Mexico)
DOI: 10.4018/978-1-4666-4094-8.ch002

Keywords: Business & Management / Business Science Reference / Marketing

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Abstract

It is argued in this chapter that pricing structure is largely affected by the strategies of profit and cost centers that are immensely pushed by the firms to gain advantage over the competitors tactically. One of the pertinent problems in the profit-center structure is it makes it impossible for the firm to consider a product’s revenues and costs separately. Another is the cost accounting system, which is not good for identifying the actual expense of generating additional offerings. Quality of price is referred as value for money from the perspective of consumers. Unwarranted increase in the prices often lowers the value for money perceptions of buyers and chances of quitting the price for the brand increases. The interrelations of price with the advanced marketing-mix of 11 Ps also help in developing the pricing structure as well as setting-up price levels. This chapter examines the strategies to consider pricing structure and levels while preparing a pricing plan. Internal and external factors affecting pricing decisions are discussed, including buyer’s perceptions of price and value, competition, and demand and price elasticity. The chapter also discusses five critical perspectives on pricing comprising price offer configuration, price metrics, price setting process, price value-chain management, and systems thinking in pricing strategy.

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