Roles of Pricing and Advertising in Marketing Mix

(a) Advertising – Most often, only a few firms directly compete with  one another in the same target market. Economists call such a  situation an oligopolistic situation. In this type of situation, many firms prefer to increase their share by increasing demand through  advertising rather than by reducing prices. The question that  arises is – why do firms prefer such a strategy? The reason is that
building up an image through advertising can be more difficult to  match than a price cut. The assumption behind this preferred  approach is that the firm can achieve a competitive edge in
advertising and that it does not possess such a large cost  advantage over competition as to make price cutting an attractive pre-empting strategy.

(b) Pricing – Price may be the major element in the marketing mix. Pricing decisions should be carefully coordinated with decisions on product, promotion and distribution. For example, the luxury segments of consumer markets suggest a quality, branded product, extra-touches, high class outlets, appeals and media that capture the luxury image and a high price to match.


SELF-ASSESSMENT EXERCISE 3
Are price and promotion, to some extent, substitutable?

SELF-ASSESSMENT EXERCISE 4

State whether the following statements are true or false:

1. Advertising can have a wider reach and establish an image for a product that cannot be matched in personal selling. (True or False).

2. Advertising can close a sale. (True or False).

3. Advertising can distinguish suspects from prospects. (True or False).

4. Advertising can act as liaison between the company and the buyers (True or False).

 CONCLUSION

The objective of a marketer is to combine the various elements of the marketing mix viz. price, product, promotion and distribution in such a  way that he/she will achieve the necessary volume of sales at a cost that will permit him/her to make a desired profit. The way these elements are to be combined will basically depend on the target market to be  served. This means that the needs and wants of the target consumers have to be studied and interpreted and a unique blend of various
elements of the marketing mix has to be designed to reach a specific group of consumers.

 SUMMARY
In this unit, we discussed marketing mix and its elements as they affect marketing activities.