Pricing As Creative Marketing

Nagle, Thomas
July 1983
Business Horizons;Jul/Aug83, Vol. 26 Issue 4, p14
Academic Journal
Pricing is often treated as a technical problem to be solved by applying rules or procedures, not as a creative marketing challenge to be met with new insight into buyers' motivations. But pricing, no less than any other aspect of the marketing mix, can be made more effective by the design of creative strategies that reflect differences among buyers. An understanding of buyers increasingly determines what products firms offer, their promotion, and their methods of distribution. This focus, the essence of modern marketing, now widely influences alt elements of marketing strategy--except for one. Prices, in many firms otherwise devoted to progressive marketing, are still set not with an eye to the buyer, but with an eye to the seller's production costs, cash flow requirements, or target rate of return. Why have marketing principles had such little influence in pricing decisions? Probably because, even within the family of marketing, pricing is a somewhat neglected child. In one survey of marketing practitioners, only half rated pricing an important policy decision.[1] In academe, pricing remains the least frequently taught and researched aspect of the marketing mix. Consequently, one is easily left with the impression that the principles of marketing are somehow less relevant to pricing. In recent years, marketers have begun to dispel that mistaken impression with prescriptions for pricing based on the measurement or calculation of consumer value.[2] These buyer-based pricing procedures are certainly more in the spirit of marketing than the cost-based procedures they are meant to replace. They are, however, but a first step toward the reconciliation of pricing with other aspects of marketing. Pricing still remains a technical problem to be solved by applying a rule or procedure, rather than a creative challenge to be met with the marketer's insight into buyers' motivations. Yet marketing's detailed attention to buyers--not just the "value" each places on a p...


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