Pricing decisions are almost always made in consultation with marketing management. Price is the only marketing mix variable that can be altered quickly. Price variable such as dealer price, retail price, discounts, allowances, credit terms, etc., directly influence the development of marketing strategy, as price is a major factor that influences the assessment of value obtained by customers.
Price can be kept as high or low, or at any level in between these two extremes. Too high would be the point at which any meaningful sales are not possible because the target customers won’t accept the product, and too low would be the point at which company would incur losses instead of profits. Price is said to be an important competitive tool, and intense price competition between rival companies often culminates in a price war and the contestants generally end up gaining nothing.
The customers, however, enjoy the benefit of low prices till such time that good sense prevails between contestants and prices are brought back to normal. In case of certain products, price becomes the indicator of product quality and helps impart an image to the product.
