Using the Marketing Mix
How price decisions affect the rest of the mix
Price is often the part of the mix customers notice first, so it has to fit with the other three. A price the product, promotion and outlets do not support looks like a mistake, and customers go elsewhere.
Promotion
A low price is promoted around value for money: the message is how much you get for how little you pay. A high price is promoted around quality, exclusivity or status, because customers need a reason to pay more than a rival charges. The advert and the price tag must tell the same story.
Product and place
Price works back on the product too. If the price has to stay low, the business may need cheaper materials or fewer features to keep costs below the price. A high price must be justified by better quality, such as longer guarantees, better design or finer ingredients, or customers feel cheated and stop buying.
Price affects place as well. Premium products are usually sold through a limited number of suitable outlets that protect their image, such as the brand's own shop or a specialist retailer. Low-priced mass-market products suit wide distribution, because a small profit on each unit only adds up at high volumes.
| Element | Effect of a low price | Effect of a high price |
|---|---|---|
| Promotion | Value for money messages | Quality, exclusivity or status messages |
| Product | Cheaper materials, fewer features | Better quality that earns the price |
| Place | Wide distribution in many outlets | Few suitable outlets that protect the image |
For example, a company making reusable water bottles could sell a plain version for £7 in supermarkets and promote it as cheap and practical, or a brushed-steel version for £32 through a handful of outdoor shops, promoted as built to last. Each price only works when everything else matches it.
That is why cutting the price on its own is risky. A premium brand that slashes its price while keeping the same quality claims and the same specialist outlets creates a mix that no longer makes sense. Customers become unsure what the brand stands for, and the specialist retailers that once protected its image may no longer want to stock it.