Price the 2nd P Of Marketing

8/9/2019 Price the 2nd P Of Marketing.

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PRICE, THE2NDP OF

MARKETINGMIX.1


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INTRODUCTION

Price is the amount of money charged for a product

or service or the sum of the values that consumers

exchange for the benefits of having or using the

product or service.

Price goes by many names (rent, tuition, fee, fare,

rate, interest, toll, premium, et cetera).

All profit and nonprofit organizations must set prices

on their products and services.

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Throughout history, prices were set by negotiation

between buyers and sellers. Fixed price policies

setting one price for all buyers--is a relatively

modern idea that arose with the development of

large-scale retailing at the end of the nineteenthcentury.

Today, we may be returning to dynamic pricing

charging different prices depending on the

individual customers and situations.

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PRICINGOBJECTIVES

Maximize current profits and return on investment

Exploit competitive position

Survival in a competitive market

Balance price over product line.

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B. FACTORSINFLUENCINGPRICINGDECISION

a) Internal Factors Affecting Pricing Decision

b) External Factors Affecting Pricing Decisions

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A) INTERNALFACTORSAFFECTING

PRICINGDECISION

I. Marketing Objectives

II. Costs

III. Organizational Considerations

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I. MARKETINGOBJECTIVES

Companies set survival as their major objective ifthey are troubled by too much capacity, heavycompetition, or changing customers wants.

To keep a plant going, a company may set a low

price, hoping to increase demand. In this case, profits are less important than survival.

As long as their prices cover variable costs andsome fixed costs, they can stay in business.

However, survival is only a short-term objective. In the long run, the firm must learn how to add

value that consumers will pay for or face extinction.

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Many companies use current profit maximization astheir pricing goal.

They estimate what demand and costs will be atdifferent prices and choose the price that will producethe maximum current profit, cash flow, or return oninvestment.

In all cases, the company wants current financial resultsrather than long-run performance.

Other companies want to obtain market shareleadership.

They believe that the company with the largest marketshare will enjoy the lowest costs and highest long-runprofit.

To become the market share leader, these firms setprices as low as possible.

A company might decide that it wants to achieveproduct quality leadership.

This normally calls for charging a high price to coverhigher performance quality and the high cost of R&D.

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II. COSTS Costs set the floor for the price that the company can

charge for its product.

The company wants to charge a price that both coversall its costs for producing, distributing, and selling theproduct and delivers a fair rate of return for its effort andrisk.

A company's costs may be an important element in itspricing strategy.

Companies with lower costs can set lower prices thatresult in greater sales and profits.

A company's costs take two forms, fixed and variable.

Fixed costs (also known as overhead) are costs that donot vary with production or sales level.

Variable costs vary directly with the level of production.9


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III. ORGANIZATIONALCONSIDERATIONS

Management must decide who within the

organization should set prices.

Companies handle pricing in a variety of ways.

In small companies, prices are often set by topmanagement rather than by the marketing or sales

departments.

In large companies, pricing is typically handled by

divisional or product line managers.

In industrial markets, salespeople may be allowed

to negotiate with customers within certain price

ranges.10


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Even so, top management sets the pricingobjectives and policies, and it often approves theprices proposed by lower-level management orsalespeople.

In industries in which pricing is a key factor(aerospace, railroads, oil companies), companiesoften have a pricing department to set the bestprices or help others in setting them.

This department reports to the marketing

department or top management.

Others who have an influence on pricing includesales managers, production managers, financemanagers, and accountants. 11


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B) EXTERNALFACTORSAFFECTING

PRICINGDECISIONS

I. The Market and Demand

II. Competitors' Costs, Prices, and Offers

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I. THEMARKETANDDEMAND

Pricing in Different Types of Markets

The seller's pricing freedom varies with different

types of markets.

Consumer Perceptions of Price and Value

In the end, the consumer will decide whether a

product's price is right.

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Analyzing the Price

Demand Relationship Each price the company

might charge will lead to a different level of

demand.

Price Elasticity of Demand

Marketers also need to know price elasticityhow

responsive demand will be to a change in price.

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II. COMPETITORS' COSTS,

PRICES, ANDOFFERS

Another external factor affecting the company'spricing decisions is competitors' costs and prices and

possible competitor reactions to the company's own

pricing moves.

Economic conditions can have a strong impact on thefirm's pricing strategies.

Economic factors such as boom or recession,

inflation, and interest rates affect pricing decisions

because they affect both the costs of producing a

product and consumer perceptions of the product's

price and value.

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The company must also consider what impact its

prices will have on other parties in its environment.

How will resellers react to various prices?

The company should set prices that give resellers a fair

profit, encourage their support, and help them to sell

the product effectively.

The government is another important externalinfluence on pricing decisions.

Finally, social concerns may have to be taken into

account.

In setting prices, a company's short-term sales, market

share, and profit goals may have to be tempered by

broader societal considerations.16


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SETTINGTHEPRICE:

A. Setting Pricing Policy

B. General Pricing Approaches

a) Cost-Based Pricing

b) Value-Based Pricing c) Competition-Based Pricing

C. New-Product Pricing Strategies

a) Market-Skimming Pricing b) Market-Penetration Pricing

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D. Product Mix Pricing Strategies

a) Product Line Pricing

b) Optional-Product Pricing

c) Captive-Product Pricing d) By-Product Pricing

e) Product Bundle Pricing

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A. SETTINGPRICINGPOLICY

Pricing policy setting starts with setting the pricing

objective that can be:

Profit Oriented (concerned with increase in profit),

Sales Oriented (basically concerned with increase in

sales) and

Status Quo Oriented. Whereas costs set the lower limit of prices, the market

and demand set the upper limit.

Both consumer and industrial buyers balance the price

of a product or service against the benefits of owning it.

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The company wants to charge a price that both

covers all its costs for producing, distributing, and

selling the product and delivers a fair rate of returnfor its effort and risk.

A company's costs may be an important element in

its pricing strategy.

Companies with lower costs can set lower pricesthat result in greater sales and profits.

Companys pricing decisions are also affected by

competitors costs and prices and possible

competitor reactions to the company's own pricingmoves there fore while setting the prices theses

facts should also kept in mind. (Tata Docomo-Airtel)20


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B. GENERALPRICINGAPPROACHES

a) Cost-Based Pricing

b) Value-Based Pricing

c) Competition-Based Pricing

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A) COST-BASEDPRICING

The simplest pricing method is cost-plus pricing

adding a standard markup to the cost of the

product.

Construction companies, for example, submit job

bids by estimating the total project cost and adding

a standard markup for profit.

Lawyers, accountants, and other professionals

typically price by adding a standard markup to their

costs.

Some sellers tell their customers they will charge

cost plus a specified markup (Khadi)22


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Any pricing method that ignores demand and competitor

prices is not likely to lead to the best price.

Markup pricing works only if that price actually brings in theexpected level of sales.

Still, markup pricing remains popular for many reasons.

First, sellers are more certain about costs than about

demand. By tying the price to cost, sellers simplify pricingthey do

not have to make frequent adjustments as demand

changes.

Second, when all firms in the industry use this pricingmethod, prices tend to be similar and price competition is

thus minimized.

Third, many people feel that cost-plus pricing is fairer to

both buyers and sellers.23


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Break-even Analysis and Target Profit Pricing

Another cost-oriented pricing approach is break-evenpricing.

Target pricing uses the concept of a break-even chart,

which shows the total cost and total revenue expected

at different sales volume levels.

Fixed costs are same regardless of sales volume.

Variable costs are added to fixed costs to form total

costs, which rise with volume.

The total revenue curve starts at zero and rises witheach unit sold.

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B) VALUE-BASEDPRICING

An increasing number of companies are basing

their prices on the product's perceived value.

Value-based pricing uses buyers' perceptions of

value, not the seller's cost, as the key to pricing.

(beer, wine, movie tickets, perfume, restaurants,

hotels, etc..)

Value-based pricing means that the marketer

cannot design a product and marketing program

and then set the price.

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Figure compares cost-based pricing with value-based pricing.

Cost-based pricing is product driven.

The company designs what it considers to be a

good product, totals the costs of making theproduct, and sets a price that covers costs plus atarget profit.

Marketing must then convince buyers that theproduct's value at that price justifies its purchase.

If the price turns out to be too high, the companymust settle for lower markups or lower sales, bothresulting in disappointing profits.

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C) COMPETITION-BASEDPRICING

Consumers will base their judgments of a product's

value on the prices that competitors charge for similarproducts.

One form of competition-based pricing is going-rate

pricing, in which a firm bases its price largely on

competitors' prices, with less attention paid to its own

costs or to demand.

The firm might charge the same, more, or less than its

major competitors.

In oligopolistic industries that sell a commodity such as

steel, paper, or fertilizer, firms normally charge the

same price. (Telecom sector)

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The smaller firms follow the leader. (Telecom

sector, Fuel retailing sector)

They change their prices when the market leader's

prices change, rather than when their own demand

or costs change.

Some firms may charge a bit more or less, but they

hold the amount of difference constant.

Thus, minor gasoline retailers usually charge a few

cents less than the major oil companies, without

letting the difference increase or decrease.

Going-rate pricing is quite popular.28


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C. NEW-PRODUCTPRICINGSTRATEGIES

Pricing strategies usually change as the product

passes through its life cycle.

The introductory stage is especially challenging.

Companies bringing out a new product face the

challenge of setting prices for the first time.

They can choose between two broad strategies:

market-skimming pricing and market penetration

pricing.

a) Market-Skimming Pricing

b) Market-Penetration Pricing 29


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A) MARKET-SKIMMINGPRICING

Many companies that invent new products initially set highprices to "skim" revenues layer by layer from the market.

(Nokia- 5880- Express music.) Intel is a prime user of this strategy, called market-skimming

pricing.

Market skimming makes sense only under certainconditions.

First, the product's quality and image must support itshigher price, and enough buyers must want the product atthat price.

Second, the costs of producing a smaller volume cannot be

so high that they cancel the advantage of charging more. Finally, competitors should not be able to enter the market

easily and undercut the high price. (hospitality industry)

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B) MARKET-PENETRATIONPRICING Rather than setting a high initial price to skim off small but

profitable market segments, some companies use market-penetration pricing.

They set a low initial price in order topenetrate the marketquickly and deeplyto attract a large number of buyersquickly and win a large market share.(RIM; Samsungmobile @ Rs. 500, RIM; Huywei data card @ Rs. 2800.Tata DOCOMO.)

The high sales volume results in falling costs, allowing thecompany to cut its price even further.

Several conditions must be met for this low-price strategyto work.

First, the market must be highly price sensitive so that alow price produces more market growth.

Second, production and distribution costs must fall assales volume increases.

Finally, the low price must help keep out the competition,and the penetration price must maintain its low-pricepositionotherwise, the price advantage may be onlytemporary.

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MANAGINGTHEPRICECHANGES

a. Initiating Price Changes

i. Initiating Price Cuts

ii. Initiating Price Increases

b. Buyer Reactions to Price Changes

c. Competitor Reactions to Price Changes

d. Responding to Price Changes

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A. INITIATINGPRICECHANGES

i. Initiating Price Cuts

ii. Initiating Price Increases

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I. INITIATINGPRICECUTS

A firm needs more business and cannot get it throughincreased sales effort, product improvement, or other

measures. It may drop its "follow-the-leader pricing and

aggressively cut prices to boost sales.

But as the airline, construction equipment, fast-food,and other industries have learned in recent years,cutting prices in an industry loaded with excess capacitymay lead to price wars as competitors try to hold on tomarket share.

Another situation leading to price changes is falling

market share in the face of strong price competition. Either the company starts with lower costs than its

competitors or it cuts prices in the hope of gainingmarket share that will further cut costs through largervolume.

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II. INITIATINGPRICEINCREASES

A successful price increase can greatly increase profits.

For example, if the company's profit margin is 3 percentof sales, a 1 percent price increase will increase profitsby 33 percent if sales volume is unaffected.

A major factor in price increases is cost inflation. Rising costs squeeze profit margins and lead companies

to pass cost increases on to the customers. Anotherfactor leading to price increases is excess demand:

When a company cannot supply all its customers'

needs, it can raise its prices, ration products tocustomers, or both.

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Price increases should be supported with a

company communication program telling customerswhy prices are being increased and customers

should be given advance notice so they can do

forward buying or shop around. (Automobile sector

in the month of December)

Making low-visibility price moves first is also a good

technique:

Eliminating discounts, increasing minimum order

sizes, curtailing production of low-margin products

are some examples.

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Price increases should be supported with a

company communication program telling customerswhy prices are being increased and customers

should be given advance notice so they can do

forward buying or shop around. (Automobile sector

in the month of December)

Making low-visibility price moves first is also a good

technique:

Eliminating discounts, increasing minimum order

sizes, curtailing production of low-margin products

are some examples.

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Wherever possible, the company should consider

ways to meet higher costs or demand withoutraising prices.

For example, it can consider more cost-effective

ways to produce or distribute its products.

It can shrink the product instead of raising the price,as candy bar manufacturers often do.

It can substitute less expensive ingredients or

remove certain product features, packaging, or

services. (Milk tetra pack to polythene pouch) Or it can "unbundle" its products and services,

removing and separately pricing elements that were

formerly part of the offer. 38

B R P C


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B. BUYERREACTIONSTOPRICECHANGES

Whether the price is raised or lowered, the action

will affect buyers, competitors, distributors, and

suppliers and may interest government as well.

Customers do not always interpret prices in a

straightforward way.

They may view a price cut in several ways.

For example, what would you think if any company

suddenly cuts its VCR prices in half?

You might think that these VCRs are about to be

replaced by newer models or that they have some

fault and are not selling well.

You might think that company is abandoning the

VCR business and may not stay in this business

long enough to supply future parts.39


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You might believe that quality has been reduced.

Or you might think that the price will come downeven further and that it will pay to wait and see.

Similarly, a price increase, which would normally

lower sales, may have some positive meanings for

buyers. What would you think if company mentioned above

raised the price of its latest VCR model?

On the one hand, you might think that the item is

very "hot" and may be unobtainable unless you buyit soon.

Or you might think that the VCR is an unusually

good value. 40

C CO O R C O S O


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C. COMPETITORREACTIONSTO

PRICECHANGESA firm considering a price change has to worry about the

reactions of its competitors as well as its customers.

Competitors are most likely to react when the number offirms involved is small, when the product is uniform, andwhen the buyers are well informed.

How can the firm anticipate the likely reactions of its

competitors? If the firm faces one large competitor, and if the

competitor tends to react in a set way to price changes,that reaction can be easily anticipated.

But if the competitor treats each price change as a fresh

challenge and reacts according to its self-interest, thecompany will have to figure out just what makes up thecompetitor's self-interest at the time.

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The problem is complex because, like the customer, thecompetitor can interpret a company price cut in many

ways. It might think the company is trying to grab a larger

market share, that the company is doing poorly andtrying to boost its sales, or that the company wants thewhole industry to cut prices to increase total demand.

When there are several competitors, the company mustguess each competitor's likely reaction.

If all competitors behave alike, this amounts to analyzingonly a typical competitor.

In contrast, if the competitors do not behave alikeperhaps because of differences in size, market shares,

or policiesthen separate analyses are necessary. However, if some competitors will match the price

change, there is good reason to expect that the rest willalso match it.

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D. RESPONDINGTOPRICECHANGES

Here we reverse the question and ask how a firm

should respond to a price change by a competitor. The firm needs to consider several issues: Why did

the competitor change the price?

Was it to take more market share, to use excess

capacity, to meet changing cost conditions, or tolead an industry wide price change?

Is the price change temporary or permanent?

What will happen to the company's market share

and profits, if it does not respond?Are other companies going to respond?

What are the competitor's and other firms'

responses to each possible reaction likely to be?43


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A. PRICINGSTRATEGIES

a. Discount and Allowance Pricing

b. Segmented Pricing

c. Psychological Pricing

d. Promotional pricing, e. Geographical Pricing

f. International Pricing

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A. DISCOUNTANDALLOWANCEPRICING Most companies adjust their basic price to reward customers

for certain responses, such as early payment of bills, volumepurchases, and off-season buying.

These price adjustmentscalled discounts and allowancescan take many forms.

A cash discount is a price reduction to buyers who pay theirbills promptly.

A typical example is "2/10, net 30," which means that althoughpayment is due within 30 days, the buyer can deduct 2percent if the bill is paid within 10 days.

The discount must be granted to all buyers meeting theseterms.

Such discounts are customary in many industries and help to

improve the sellers' cash situation and reduce bad debts andcredit collection costs.

A quantity discount is a price reduction to buyers who buylarge volumes.

A typical example might be "Rs10 per unit for less than 100

units, Rs9 per unit for 100 or more units."

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By law, quantity discounts must be offered equally to allcustomers and must not exceed the seller's cost savings

associated with selling large quantities. These savings include lower selling, inventory, and

transportation expenses.

Discounts provide an incentive to the customer to buy morefrom one given seller, rather than from many differentsources.

A functional discount (also called a trade discount) isoffered by the seller to trade channel members who performcertain functions, such as selling, storing, and recordkeeping.

Manufacturers may offer different functional discounts to

different trade channels because of the varying services theyperform, but manufacturers must offer the same functionaldiscounts within each trade channel.

A seasonal discount is a price reduction to buyers who buymerchandise or services out of season. 46


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For example, lawn and garden equipment manufacturersoffer seasonal discounts to retailers during the fall and winter

months to encourage early ordering in anticipation of theheavy spring and summer selling seasons.

Hotels, motels, and airlines will offer seasonal discounts intheir slower selling periods.

Seasonal discounts allow the seller to keep production

steady during an entire year. Allowances are another type of reduction from the list price.

For example, trade-in allowances are price reductions givenfor turning in an old item when buying a new one.

Trade-in allowances are most common in the automobile

industry but are also given for other durable goods. Promotional allowances are payments or price reductions to

reward dealers for participating in advertising and salessupport programs. 47

B SEGMENTED PRICING


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B. SEGMENTEDPRICING Companies will often adjust their basic prices to allow for differences

in customers, products, and locations.

In segmented pricing, the company sells a product or service at two

or more prices, even though the difference in prices is not based ondifferences in costs.

Segmented pricing takes several forms.

Under customer-segment pricing, different customers pay differentprices for the same product or service.

Museums, for example, will charge a lower admission for studentsand senior citizens.

Under product-form pricing, different versions of the product arepriced differently but not according to differences in their costs.

Using location pricing, a company charges different prices for

different locations, even though the cost of offering at each locationis the same.

For instance, theaters vary their seat prices because of audiencepreferences for certain locations.

Finally, using time pricing, a firm varies its price by the season, themonth, the day, and even the hour.

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C. PSYCHOLOGICALPRICING

Price says something about the product.

For example, many consumers use price to judge

quality.

An Rs1000 bottle of perfume may contain only Rs 300

worth of scent, but some people are willing to pay the

Rs 1000 because this price indicates something special.

In using psychological pricing, sellers consider thepsychology of prices and not simply the economics.

For example, one study of the relationship between

price and quality perceptions of cars found that

consumers perceive higher-priced cars as having higher

quality.

By the same token, higher-quality cars are perceived to

be even higher priced than they actually are.49


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When consumers can judge the quality of a product by

examining it or by calling on past experience with it, they

use price less to judge quality.

When consumers cannot judge quality because they

lack the information or skill, price becomes an importantquality signal:

Another aspect of psychological pricing is reference

pricingprices that buyers carry in their minds and refer

to when looking at a given product.

The reference price might be formed by noting current

prices, remembering past prices, or assessing the

buying situation.50


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D. PROMOTIONALPRICING, Companies will temporarily price their products below list

price and sometimes even below cost.

Promotional pricing takes several forms. Supermarkets and department stores will price a few

products as loss leaders to attract customers to the store inthe hope that they will buy other items at normal markups.

Sellers will also use special-event pricing in certain seasonsto draw more customers.

Manufacturers will sometimes offer cash rebates toconsumers who buy the product from dealers within aspecified time; the manufacturer sends the rebate directly tothe customer.

Rebates have been popular with automakers and producers

of durable goods and small appliances, but they are alsoused with consumer-packaged goods.

Some manufacturers offer low-interest financing, longerwarranties, or free maintenance to reduce the consumer's"price." 51


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E. GEOGRAPHICALPRICING

A company also must decide how to price its productsfor customers located in different parts of the country orworld.

Should the company take risk of losing the business ofmore distant customers by charging them higher prices

to cover the higher shipping costs? Or should the company charge all customers the same

prices regardless of location?

Because each customer picks up its own cost,supporters of FOB pricing feel that this is the fairest wayto assess freight charges.

The disadvantage, however, is that Peerless will be ahigh-cost firm to distant customers?

Uniform-delivered pricing is the opposite of FOB pricing.

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Here, the company charges the same price plus freight

to all customers, regardless of their location.

The freight charge is set at the average freight cost.

Other advantages of uniform-delivered pricing are that it

is fairly easy to administer and it lets the firm advertiseits price nationally.

Zone pricing falls between FOB-origin pricing and

uniform-delivered pricing.

The company sets up two or more zones.All customers within a given zone pay a single total

price; the more distant the zone, the higher the price.

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F. INTERNATIONALPRICING Companies that market their products internationally must

decide what prices to charge in the different countries inwhich they operate.

In some cases, a company can set a uniform worldwideprice.

The price that a company should charge in a specific countrydepends on many factors, including economic conditions,competitive situations, laws and regulations, and

development of the wholesaling and retailing system. Consumer perceptions and preferences also may vary from

country to country, calling for different prices.

Or the company may have different marketing objectives invarious world markets, which require changes in pricingstrategy.

Costs play an important role in setting international prices.

Travelers abroad are often surprised to find that goods thatare relatively inexpensive at home may carry outrageouslyhigher price tags in other countries. 54

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TYPESOFPRICINGSTRATEGIES

1. Skimming strategy

2. Penetration pricing strategy3. Differential pricing strategy

4. Geographic pricing strategy

5. Product line pricing strategies

a) Price bundling

b)Premium pricing

c) Image pricing

d) Complementary pricinge) Captive pricing strategy

f) Loss leader strategy

g) Two part pricing55


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D. PRODUCTMIXPRICINGSTRATEGIES

The strategy for setting a product's price often has

to be changed when the product is part of a product

mix.

In this case, the firm looks for a set of prices that

maximizes the profits on the total product mix.

Pricing is difficult because the various products

have related demand and costs and face different

degrees of competition.

We now take a closer look at the five product mixpricing situations

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A) PRODUCTLINEPRICING

Companies usually develop product lines ratherthan single products.

In product line pricing, management must decide onthe price steps to set between the various products

in a line. The price steps should take into account cost

differences between the products in the line,customer evaluations of their different features, andcompetitors' prices.

In many industries, sellers use well-establishedprice points for the products in their line.

The seller's task is to establish perceived qualitydifferences that support the price differences. 58


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B) OPTIONAL-PRODUCTPRICING

Many companies use optional-product pricingoffering to sell optional or accessory products alongwith their main product.

For example, a car buyer may choose to order

power windows, cruise control, and a CD changer. Pricing these options is a sticky problem.

Automobile companies have to decide which itemsto include in the base price and which to offer asoptions.

Until recent years, The economy model wasstripped of so many comforts and conveniencesthat most buyers rejected it.

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C) CAPTIVE-PRODUCTPRICING

Companies that make products that must be used along

with a main product are using captive product pricing.

Examples of captive products are razor blades, camera

film, video games, and computer software.

Producers of the main products (razors, cameras, video

game consoles, and computers) often price them low and

set high markups on the supplies.

Thus, camera manufactures price its cameras low

because they make its money on the film it sells.

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In the case of services, this strategy is called two-partpricing.

The price of the service is broken into a fixed fee plusa variable usage rate.

Thus, a telephone company charges a monthly ratethe fixed feeplus charges for calls beyond some

minimum numberthe variable usage rate.Amusement parks charge admission plus fees for

food, midway attractions, and rides over a minimum.

The service firm must decide how much to charge forthe basic service and how much for the variable

usage. The fixed amount should be low enough to induce

usage of the service; profit can be made on thevariable fees. 61

D) BY-PRODUCT PRICING


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D) BY PRODUCTPRICING

In producing processed meats, petroleum products,chemicals, and other products, there are often by-products.

If the by-products have no value and if getting rid of them iscostly, this will affect the pricing of the main product.

Using by-product pricing, the manufacturer will seek amarket for these by-products and should accept any pricethat covers more than the cost of storing and delivering

them. This practice allows the seller to reduce the main product's

price to make it more competitive.

By-products can even turn out to be profitable.

For example, many lumber (saw) mills have begun to sell

bark chips and sawdust profitably as decorative mulch (akind of covering) for home and commercial landscaping.

Sometimes, companies don't realize how valuable their by-products are. 62


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E) PRODUCTBUNDLEPRICING

Using product bundle pricing, sellers often combineseveral of their products and offer the bundle at areduced price.

Thus, theaters and sports teams sell season tickets

at less than the cost of single tickets; hotels sellspecially priced packages that include room, meals,and entertainment; computer makers includeattractive software packages with their personalcomputers.

Price bundling can promote the sales of productsconsumers might not otherwise buy, but thecombined price must be low enough to get them tobuy the bundle. 63

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Price the 2nd P Of Marketing