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How does Pricing Strategy affect Marketing Strategy?

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How does Pricing Strategy affect Marketing Strategy?

In today’s online marketing landscape, pricing plays a crucial role in determining the success of marketing campaigns. It affects marketing in two distinct ways: by influencing the marketing budget available and by affecting campaign effectiveness.

Firstly, the pricing strategy used directly determines the profit margin on a product, which in turn influences the amount of marketing budget available for promoting the product. This sets the maximum Cost Per Acquisition (CPA) or Return On Ad Spend (ROAS) required to keep things profitable.

Secondly, price has a significant impact on marketing effectiveness. When a product is priced competitively, customers are more likely to click on ads, and to purchase. Competitive pricing strategies result in higher Click Through Rates (CTR) and higher Conversion Rates.

Google Shopping and Microsoft (Bing) Shopping are incredibly popular platforms for browsing and buying products, and the product price can impact the marketing metrics in a big way.  They are price comparison sites with the function to sort by Price – Low to High. Reducing the price of a product can result in higher visibility on the platforms, as the product will appear higher on the page. However, this comes at the cost of a lower profit margin.

So, pricing affects Margin, Click Through Rate and Conversion Rate.

Profit is determined by Margin, Cost Per Click, Click Through Rate and Conversion Rate, so Pricing will directly impact 3 out of these 4 important metrics.

Therefore, companies must carefully consider their pricing strategy when using Google and Microsoft Shopping. By integrating your pricing strategy into your marketing strategy, you can ultimately increase profit.

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