Role of Price in Marketing Mix

This article discusses the role of price in the marketing mix, specifically in the food and beverage industry. It explores how pricing strategies can influence consumer behavior, particularly among low-income groups. The article also highlights the impact of pricing on the overall growth and development of the industry.

Running Head: MARKETING MIX
Food industry
Role of price in marketing Mix
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MARKETING MIX 1
Industry introduction
After service and manufacturing industry, Food and beverage industry is considered as
the third leg of the development and growth. This industry is having a great influence on the
GDP of the country after service industry. This industry is also known for its employment
generation in both rural as well as urban Australia.
Product/service provided
This industry is having a very important role in meeting the food and beverage demand
on the global level. The main aim of this industry is to meet all the current demand, challenges
and offer an innovative product in the market. One of the main services offered by this industry
is developing a primary connection in the form of preparing snacks, meal, and beverages to
eliminate the hunger of the person (Chen, 2012). The concept behind the growth of this industry
is very simple: people cannot stop traveling in their life, no matter what may be their purpose; it
can be business, visit, and personal. This travel often generates a desire for food or drinks when
they are out of their home. In addition to this, this industry also offers service like motivating or
encouraging the other section of the population to fulfill this desire of eats and drink. At present
the interests of the Australian public have become more different and therefore it has pressure
Food and beverage industry to offer diversity in their Food and beverage products (Mahalik &
Nambiar, 2010).
Current Food and beverage industry market in Australia is estimated up to 174 billion
ASD. In Australia, Food and beverage industry covers a large portion of the products available in
the market such as beverages under beverage section (Globledge, 2019). While under the food
section there are dairy, fruits, and vegetables, Grain, Meat, Poultry, seafood and Bakery.
Beverage section includes segments like carbonate, non-carbonate soft drinks, water bottle, ice
and Alcohol drinks. Dairy segment includes only those products which are related to raw or
processes milk category and their related substitutes. In fruits and vegetable section it includes
services of food retailers food service e provides to offer fresh herbs, fruits, species and
vegetable to the potential customers. In Grain segment, it includes products like mill flour, rice,
malt grains, and dough. Food section also covers a large portion of meat and seafood services
which are properly processed and shaped as per the requirement of the potential customers

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(Cuganesan, Guthrie, & Ward, 2010). It also includes some portion of raw sugar cane and
processed sugar.
In recent time, a new segment of Food and beverage industry has emerged in the market.
This segment is known as healthier snakes/food products which are able to manage very high
demand on the global level. At present this segment is playing a significant role in the daily lives
of the individual. Its health feature has offered it a very unique place in the Australia food market
and in 2018; it has been found out that this segment is almost having 150 billion dollar market on
the global level. In fact, this segment has impacted the other segment of Food and beverage
industries because people have become very conscious related to their health and are increasing
their demand for this segment in order to remain fit. This segment of Food and beverage industry
is also getting a good amount of support from changing habits of the people due to their busy
lives.
Location
There are some areas in Australia which are continuously suffering economic challenges.
In addition to this various traditional issues are also adding their contribution to bringing
unstable condition such as unemployment and health issues.
(Sources: Morgan, 2018)
This data is clearly indicating that economic issue in Australia is ranking at the top in list
of problems facing by Australia such as social, environmental, health, human rights and so on.
As economic condition is directly linked with the purchasing power of the potential customer.

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Thus, a clear drop can be expected in the business of food and beverage industry. Therefore in
this situation, target location will western areas of Australia which consists of combined number
of middle class as well as poor people. Middle-class people belong to that section of the
population which is highly impacted by these issues in the economic situation. Economic issue
has not only impacted their living standards but it has also impacted their health. People living in
Western Australia are often subject to the poor health issue and it is known to the world that
health facilities service in Australia is very costly as compared to other countries (Brown, 2011).
One of the main reasons for their poor health is food because these people are not capable
enough to consume high-quality health food due to their higher price. Due to their poor
economic condition, these people have very less choice and have to consume unhealthy food and
beverage which badly impact their health condition. People living in Western area of Australia
have the desire to purchase a healthier segment of food and beverage which are fresh and offer
healthy nutrients to the consumer (Dollery & Grant, 2011). In this situation, price act as one of
the greatest barrier in consumer behaviour towards these products. It can be clearly said that
price is having great influence over the growth of Food and beverage industry of Australia.

MARKETING MIX 4
Target market
After exploring all the possible situations related to an economic issue, it can be easily
said that if Food and beverage industry has to improve their current position in Western
Australia. This industry has to focus their business interest on the people of Western Australia
especially middle and poor class of the society because they form the large section of Australian
population (Goyat, 2011). As per the study, it can be said that an industry can be successful only
if they are able to form a strong customer base in the business market. Having a strong customer
base ensure that industry is going to have a higher amount of sales and sales is directly linked
with the profit.
(Sources: Australian Bureau of Statistics, 2016)
This graph is directly indicating the rise in the population of males and females. Due to
economic issues, these section of Australian population have become very sensitive towards
price and this situation is actually offering a great platform for food and beverage industry. In
this situation, Food and beverage industry can make use of price sensitiveness on their positive
side by offering their products at low price to this section of the population. This strategy will
benefit food and beverage industry in two ways (Simkin, 2008). First, this strategy will help the

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industry to develop strong customer base because health food and beverage product will be
offered within the purchase capability of the target population and another important benefit will
be that this strategy will be able to create a unique image in the community which will ensure the
sustainable growth of this industry. Target this section of population will help this industry in
meeting their ultimate aim of feeding the hungry population in such a way that their health, as
well as profit of the organization, will not get affected in any situation. As per the study, it has
been found that people or individual who are struggling from economic issues always display
same kind of purchasing behaviour (Harrison & Kjellberg, 2010). This will help the industry to
form their strategy in such a way that there will be no need of bringing any change related to
consumer choice. Consumer will display a similar type of behaviour in this business world which
is full of uncertainty and where it is not easy to predict or forecast the mood and taste of the
potential customer towards their product or services. Predicting or forecast always include a
great amount of time and effort which can be saved in this situation and can be used in other
business operations.
Literature review
According to Waterlander, W and Mul, A, 2011, one of the most important aspects which
influence the consumer behaviour of the low-income group is price. This is because this section
of group has very limited expectation from their life as compared to people having a high
income. In addition to this, their lifestyle behaviour is often considered very simple as compared
to the lifestyle of higher income group. Also, pricing strategy is often seen as favorable tactic to
promote sale growth such as buy one, get one free which form it as a significant part of the
marketing mix. It is very common that low-income group often experience economic issues and
this impacts their health by developing a wall of restricts towards purchasing healthy food. The
research further indicates that pricing strategy intervention is often considered a positive sign for
huge sale.
As per Fyles, H and Madramootoo, C, 2016, low-income group are totally dependent on
the food price while consuming some product. A little rise in price of food directly impacts their
complete households because these people are forced to decrease the quality and amount of food
consumption. Rise in food price is also connected to the insecurity faced by these low-income
groups related to food consumption. According to Larsen, K., and Gilliland, J, 2009, it can be

MARKETING MIX 6
higher price of food has not only impacted the health of the low-income group but it has also
impacted the overall growth of the country. Higher price has forced people to consume unhealthy
food which is considered as one of the main reason for facing problems related to health on the
global level. Rise in price has also disturbed the overall food consumption pattern of the many
developing countries especially Africa. It has been seen that from past two years wheat is
consumed more as compared to other food products due to their low price. Around 90% of wheat
is being imported to the country which has actually impacted the economic growth of the
country.
According to Hawkes, C and Smith, T, 2015, it can be said that pricing does not only
impact the consumer but it is also impacting the people which are associated with agriculture
such as farmers. High price of products is actually forcing the farmer to grow product which is in
the demand and most of the time it has been found that these crops do not support their soil. As a
result of this, the farmers have to bear heavy loss and are being forced to life their life under the
poverty line. In starting phase they may be able to eliminate their food insecurity but in long run,
they are being forced to poverty zone. Also, income of people associated with agriculture enters
in to struggle zone because due to globalization it is not easy to meet the demand as per the
supply. As a result of this, it becomes very difficult to maintain the quality of the product and is
not able to pass through the food security test and get wasted.
According to Pingali, P, 2012, it is not easy to bring equilibrium in the pricing strategy
associated with the food products. Sometimes price is high and sometimes they are continuously
declining. As per the research the world is facing a sharp spike diverse pattern mainly in
commodity prices due to constructive shift in demand. These variations are actually impacting
the overall economy pattern of various developing and developed country because they are
continuously struggling to meet the overall consumption pattern on the global level. In addition
to this price, variations have both positive as well as negative impact on the economic
development of many countries. Pricing is also connected to the business expansion because it is
the price strategy which encourages the potential customer as well as the organization to
establish their business in that particular zone.
According to Pingali and McCullough, 2010, decline in price has also ways been
considered beneficial point for the poor people because it increases their purchasing power. Low

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product price allows them to buy all types of food and beverage products which are essential for
their healthy growth. In addition to this low price is also a positive sign for agriculture because it
will help the farmers to generate better crops. Low pricing helps farmer in increasing their
income level by allowing them to minimize their spending on farming and helping to attain
entrance to global platform due to high demand for food products.
Pricing policy is suggested as
being a powerful way to
influence dietary behaviour, and
might be especially suitable
for reaching low-income groups.
Low-income groups have
a far lower life expectancy than
high-income groups and
part of this can be explained by
lifestyle behaviours, such as
dietary behaviour. Being
overweight and obesity are also
more prevalent among low-
income groups
(6)

MARKETING MIX 8
.
Pricing strategies (e.g. price
reductions/increases, the
‘buy one get two’ strategy,
bonus systems) are seen as a
promising approach because
sales promotions form an
an important part of the
marketing mix
(7,8)
. Furthermore,
research has shown that energy-
dense foods tend to be
cheaper than low-energy-dense
foods, and that diets that
comply more with dietary
guidelines are more expensive
than diets that comply less
(9,10)

MARKETING MIX 9
( a l s o W E W a t e r l a n d e r ,
I v a n
Amstel, WE de Haas et al.,
unpublished results).
Pricing policy is suggested as
being a powerful way to
influence dietary behaviour, and
might be especially suitable
for reaching low-income groups.
Low-income groups have
a far lower life expectancy than
high-income groups and
part of this can be explained by
lifestyle behaviours, such as
dietary behaviour. Being
overweight and obesity are also
more prevalent among low-
income groups
(6)

MARKETING MIX 10
.
Pricing strategies (e.g. price
reductions/increases, the
‘buy one get two’ strategy,
bonus systems) are seen as a
promising approach because
sales promotions form an
an important part of the
marketing mix
(7,8)
. Furthermore,
research has shown that energy-
dense foods tend to be
cheaper than low-energy-dense
foods, and that diets that
comply more with dietary
guidelines are more expensive
than diets that comply less
(9,10)

MARKETING MIX 11
( a l s o W E W a t e r l a n d e r , I
v a n
Amstel, WE de Haas et al.,
unpublished results).

MARKETING MIX 12
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McCullough, E. B., Pingali, P. L., & Stamoulis, K. G. (2010). Small farms and the
transformation of food systems: an overview. Looking east looking west, 47.

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