What a price should do

A well chosen price should do three things:

1 Achieve the financial goals of the company (e.g., profitability)

2 Fit the realities of the marketplace (Will customers buy at that price?)

3 Support a product's positioning and be consistent with the other variables in the marketing mix

4 Price is influenced by the type of distribution channel used, the type of promotions used, and the quality of the product

5 Price will usually need to be relatively high if manufacturing is expensive, distribution is exclusive, and the product is supported by extensive advertising and promotional campaigns

6 A low price can be a viable substitute for product quality, effective promotions, or an energetic selling effort by distributors