Creating the right marketing mix
A Motorola case study

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Page 3: Price

Motorola imagePrice is the one element of the marketing mix which creates sales revenue - all the others are costs. For companies like Motorola, price is a key element in the marketing mix. It is a critical selling point. 'Getting the price right' is a vital part of building relationships with customers.

As with other companies, prices charged by Motorola are linked to the product life cycle. When a new product is launched prices will typically be quite high. This is because a lot of product and market research has gone into producing the product. It usually takes time for large numbers of consumers to purchase new products. For example, 3G phones are only just beginning to sell in large quantities. As a product matures and sales increase, it is possible to reduce costs.

Economies of scale are important. These come in when a firm is able to produce on a large scale. With high outputs of production, costs of research and development, software engineering and investment in plant (manufacturing machinery and tooling) can be spread. State-of-the art products are sold at premium prices reflecting the high quality of the items and their innovative nature.

The costs to the users of Motorola mobile phones are kept down because they are subsidised by the network providers such as Vodafone. Network providers want as many people as possible to subscribe to their network. They therefore like to link with the producers of the best designed phones which feature the most exciting and effective technologies. Phone retailers will often supply free accessories with a mobile phone to make it more useful to phone users and to encourage them to buy.

Motorola | Creating the right marketing mix