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Pricing and Sales Promotion

In: Decision Making in Marketing and Finance

Author

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  • Paul Sergius Koku

Abstract

The price at which to sell a firm’s offerings, for several reasons, is one of the most important decisions for a firm. Price is the only variable that generates revenue for the firm, therefore it is the engine or, better still, the gasoline in the engine that keeps the firm running. A mistake in pricing could easily make the firm go bankrupt or out of business. Several books have been written on pricing and economists have devoted a significant effort to the study of pricing, yet our understanding on how consumers use price is incomplete because there is a big psychological component to it. Though the psychological aspect of price still remains a black box to some extent, our current understanding can be useful to organizations particularly in terms of how they strategize to meet the consumers’ unmet needs, and also deep enough not to use price as a strategic variable because it can be easily copied by competition. We also know that price can be used as a signaling variable to convey nonobvious information on quality (as discussed in chapter 4).

Suggested Citation

  • Paul Sergius Koku, 2014. "Pricing and Sales Promotion," Palgrave Macmillan Books, in: Decision Making in Marketing and Finance, chapter 0, pages 131-148, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-137-44477-6_9
    DOI: 10.1057/9781137444776_9
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