The number of price and non-price factors makes their impact on the pricing decision. Both these factors play their vital role in the pricing decisions of firms.
Impact of these factors may be discussed as under:
Role of Price Factors in Marketing
The general rule of economics guide the marketing firms that higher prices will lead to lower demand and lower will increase the demand.
In the following situation the role of the price factor is Greater in marketing:
1. When the customers of the target market are having Limited income. Limited income will make customers price-wise sensitive. This is true in the case of the number of developing countries. In these markets, the firm may take full advantage by setting lower prices of products with reasonable quality.
2. Price elasticity also an important factor in this regard. If the impact of price reduction is in the generation of Greater demand and the firm may use price as an important weapon.
Therefore, the marketing company may use price as an important tool to attain profitable sales volume. In the case of inelastic demand, the firm may set higher prices of its products. 10 Major Factors Affecting Pricing of Product (Explained).
Role of Non-Price Factors in Marketing
The role of non-price factors is most significant. The customer not consider the prices of its products or services, but may give more weight to the number of other factors.
These factors may be described as under:
1. Bias Regarding Price and Quality Co-relation
This bias plays a vital role when the firm is marketing its products to developed countries or to the higher and middle-income group customers of developing countries.
These customer May reject the product due to perceptions of lower price lower quality relationship.
In spite of providing a good quality product at reasonable prices, the firm may face marketing problems.
For these markets high price, high-quality product strategy may be more appropriate.
2. Country of Origin
The name of the country from which product belongs also play its much greater impact on marketing.
The customers may give preference to those products in their buying decision, where the image of the country of origin is bright and good.
Image perception is more important in marketing, rather than the product itself.
In spite of the good quality product, the customer does not accept it due to the poor image of the country of origin.
3. Brand Image
The brand image of the products of the marketing company may be a great source of motivation for customers across the world in their buying decisions.
This requires super quality, continuous improvement in quality and carefully designed an aggressive advertising campaign. It may take years to create a favorable brand image for its product for an individual firm.
The brand image of Sonic, Philips, Coca-Cola, Pepsi, Intel, IBM, Mercedes, Volvo, Tata Tea, LG, Samsung, etc. is altogether different. Brand image paves the way for the creation of brand loyalty.
When the firm is successful in getting brand loyalty, It may enter into the non-price competition. Because the customer is attached to a specific brand and can ignore higher prices.
4. Price Differentiation
With the help of sound research and development, if the firm has developed significant differences in its products in comparison to its competitors, then customers will not mind high price.
There is a number of areas where a firm can make a significant difference in its products, such as features, design and operational efficiency of the product.
5. Speed of Delivery
Sometimes the firm may want quick delivery of its order, due to several reasons.
In this case, the firm will be able to get orders, when it is in the position of a quick delivery, in spite of higher prices from the normal market prices.
6. The Capacity of Bulk Supply
The capacity of bulk supply is another important non-price factor in marketing.
Marketing companies having vast operations and turn over give reference to those firms having the capacity to supply big orders. It provides enormous help to them in getting uniform quality products.
The administrative work, also becomes rather smooth, because it is better to deal with few firms in comparison to the number of firms, supplying Limited products.
Firms remain ready to pay high prices if they are getting bulk supply.
7. Type of Product
In customer goods prices Mein play some role in marketing.
In the case of Industrial Products, super quality arms and precious items the customers’ requirements from the products will be totally different.
In the buying decision of the above products, the price consideration will shift in lower agenda.
8. Sales Services
Sales services may be divided into three types – pre-sales, at the time of selling and after-sales. In consumer good the role of Services Limited.
But in the case of engineering products, installations, airplanes, Fighter planes, submarines, supercomputers, software, etc. the role of services offered by suppliers is more important than prices of these products.
Pre- Sales Services includes free advice in connection with the selection of the right product of the company. Customer may buy the wrong product in the lack of proper knowledge.
At the time of sales, services include free installation services. Demonstration of product and imparting proper training to the buyer.
After-sales services include free repair products and free replacement of parts under the warranty period.
Customers give preference to those companies who are providing goods services and will not mind bit higher prices of products.
9. Credit Terms
Credit terms also play an important role in public and private buying industrial houses.
Developing countries require a variety of Engineering and Industrial Products for the sound foundation of their Rapid industrialization. Preference will get those firms who are offering attractive credit terms in relation to the maximum payment period, simple terms and conditions and lesser that of interest.
Buyer may ready to pay bit higher prices, because in the longer payment schedule, sometimes the proportion of interest may be higher than the original price of the product.
But due to poor replying capacity longer payment schedule is preferred.
10. Quick Settlement of Claims
Marketing companies envolve a specific mechanism to address the disposal of Claims.
The buyer gives more weight to those companies having a quick settlement of claims.
If the customer is satisfied in this regard, he made a high price.
Thus, now you know the role of price and non-price factors in marketing.