ABSTRACT
Whether we ,are concemed with pricing a new offering or revising the price of current offerings, the pricing decision can be key to profitability since price, in influencing the quantity demanded, determines the surplus of revenue over the costs of doing business. Even modest price differences can have a dramatic effect on profit and a price at odds with the rest of the marketing mix (for example, the product's promoted image) can spell disaster. This is because price is information to the buyer; not just information about what money sum must be spent to complete the buying transaction but information that affects perceptions of the offering. For example, consumers on occasions will use the asking price as a guide to value so that the higher the price, the more valuable a consumer may estimate the product to be. Not every seller, though, is in a position to set prices which may be controlled by the govemment or some industry-sponsored, govemment-approved agency, board, or association. In this chapter we are assuming that the seller (including intermediaries) makes the pricing decision even if freedom to decide is highly circumscribed by forces other than those of the market place.
