2 management - School of International Business and ...

389 What is marketing?
Price – this is the amount a customer pays for a product. Setting a good price can be quite tricky
and relies on cost curves from economics. Important considerations for pricing include the cost
of raw materials and production, what competitors are charging locally and globally, the cost of
substitutes, and exchange rates.
Pricing is an integral part of the marketing mix because it is the only element of the mix that di-
rectly brings in revenue. Additionally, once you have set a price, your consumers will be affected
by any changes you make to the structure. Your price will also effect which distribution channels
are most appropriate for your product and who your market competition is.
Variables within your pricing structure may be:
– List Price (the manufacturer-designated price of the product)
– Discounts and Allowances (available to certain customers or locations)
– Financing or Leasing (required to facilitate purchasing large-ticket items)
Place – this represents the location where a product can be purchased. It is often referred to as
the distribution channel. It can include any physical store as well as virtual stores on the Internet
and mobile phones. Although it may seem obvious, it's important to remember that even if you
have the best product in the world, you won't be able to sell it if your customers don't know how
and where to buy it.
Figure 2 | The Marketing Mix
Due to the intricacies of distribution, your distribution channel could be as simple as manufacturer
to consumer, and as complicated as manufacturer to wholesaler to retailer to consumer.
Promotion – this is how marketers communicate with customers. Again, you might have a fantas-
tic product, but if customers don't know about it, they aren't going to buy it. There are five common
elements (and they sometimes overlap) to promotion. They include: advertising, public relations,
personal selling, direct marketing, and sales promotion.