ABSTRACT
This chapter analyses the variety of factors affecting the pricing decision. It focuses on the nature and types of costs that are relevant to the area of marketing management. The decision to change some portion of the marketing mix is based on an assumption about the changes' effect on sales or profits. Identifying the effect of price changes can be looked at in two ways. First, consumers can be looking for the price elasticity of demand over a continuous demand curve. Secondly, they can be looking for the effect of price change on a demand curve that allows for only one sale. Correlation analysis can be used to calculate the relationship between price and sales. The pricing problems of a multi-product firm tend to be more complex than in a single-product firm. To compensate for the fact that various types of firms in the marketing channel perform different services, sellers have developed a system of functional discounts.
