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Price refers to the amount a customer pays for a product. Price may also be a consumer's expectation for getting a certain product (e.g. time or effort). Price is the only variable that has implications for revenue. Price is the only part of the marketing mix that talks about the value for the firm.
For example: if a firm sells a product to their customer for a cheaper price and that customer resells the product demanding a higher price from another buyer then the chances of the firm failing to make a higher profit is predicted because they could have sold their product at a higher rate than the re-seller and made further profit.
Commodization happens when the product a seller offer is as good or as bad as the competitor is offering. In these scenarios, the seller will find it difficult to sell the product at a higher price. Customers often use commodization to drive down the price of a product during a negotiation.
This theory works well because of how the reference point is established by the consumer. The reference point for something that is $19.98 would be $20. This leads the just-below price to be seen as involving a gain, thus making it feel like a better deal. Consumers ignore the least significant digits rather than do the proper rounding.
According to the American Marketing Association, consumer behaviour can be defined as "the dynamic interaction of affect and cognition, behaviour, and environmental events by which human beings conduct the exchange aspects of their lives." As a field of study, consumer behaviour is an applied social science. Consumer behaviour analysis is the ...
The elements of the marketing mix are: Product – the item or service that is being offered, through its features and consumer benefits and how it is positioned within the marketplace whether it be a high or low quality product. Price, is a reference to the sacrifices made by a consumer to acquire a product and may include both monetary and ...
Social value: The extent to which owning a product or engaging in a service allows the consumer to connect with others. Psychological value: The extent to which a product allows consumers to express themselves or feel better. For a firm to deliver value to its customers, they must consider what is known as the "total market offering."
Consumer value is used to describe a consumer's strong relative preference for certain subjectively evaluated product or service attributes. [1] [2] [3] [4]The construct of consumer value has widely been considered to play a significant role in the success, competitive advantage and long-term success of a business, and is the basis of all marketing activities. [5]