What Is Marketing?

7.

Optimal Pricing

AS DESCRIBED IN THE CHAPTER “MARKETING STRATEGY,” a firm’s marketing efforts are directed toward creating value for its chosen customers.¹ Understanding customers’ wants and needs is the foundation for building this value. In turn, capturing that value falls to the marketing mix, commonly referred to as “the four Ps”:

• Developing a product that satisfies those wants and needs
• Designing a promotion program that conveys the value of that product to customers
• Choosing a distribution program (i.e., place) that makes that product readily available
• Designing a pricing strategy that simultaneously creates a consumer’s incentive to buy that product and the firm’s incentive to sell that product

The first three of these marketing mix ...