With last month's rise in VAT to add to the other existing pressures on consumer disposable income, charging the right price for your product is more crucial than ever.

Although not always considered to be a responsibility of the marketing function, price is a key element of the marketing mix, and the only one of the four Ps which generates revenue.

However, whilst that is its primary role (marketing is after all the art of satisfying a customer's demands profitably), it also has several other important functions. For example, the price which you charge for your product must also be in line with the wider marketing mix so that you create a consistent image in the mind of the consumer; it is no good developing a premium product which you then price at the low end of the market.

Obviously on this point your price must cover costs, however cost plus pricing is not necessarily your best strategy. Your costs should not drive your pricing; instead the price set should be what you've deduced from your research that the market will bear.

Remember your customers will, if there is no other information available, judge the quality of your product on the price which you charge and use it to benchmark your product against the competition.

Proof of this, if needed, can be found through our preference for certain branded food products despite the fact that, during blind taste tests, no discernable differences can be found.

Your price will also change over time as your product develops and matures - like all other elements of the marketing mix it needs to be regularly checked, reviewed and modified where necessary.

Whilst you may price your new product high to gain recognition and prestige, as the market grows and matures the price will need to adapt to competitively win market share. Once the market is saturated and beginning to decline you may wish to raise the price so as to gain as much revenue as possible before launching a replacement.

Finally, at the risk of repeating points made in previous articles, price is something which you should never compete on. By competing on price you will, whilst potentially make short-term gains, reduce your product to a commodity.

This will undermine all other marketing efforts made, destroy the brand strategy and encourage an already fickle consumer to become more price conscious. What is more, it has no guarantee of success since, should your competitors match your reduction, all you will have achieved is an erosion of your margins.

Together with KM Business Events, the Kent Branch of the CIM will be running a pricing strategies workshop on February 16. More information, including booking details, is available on www.cim.co.uk/kent