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Pricing

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  • 1. Pricing Soma GiriDisclaimer: - Some of the images and content have been taken from different online sources and this presentation is intended only for knowledge sharing but not for any profitable reasons
  • 2. What This is the only element in the marketing mix that brings in the revenues. All the rest are costs Price communicates the value positioning of the product. Price = Cost + Profit
  • 3. WhyA company must set its price in relation to the value delivered and perceived by the customer Lower Higher perceived price value Company misses potential profits Lower Lower price perceived value Company fails to harvest potential profits
  • 4. WhyPhilip Kotler identified 9 price-quality strategies High Price Low Price High Quality High Super Premium Value Value Over Mid Good Charging Value Value False Rip-off Economy Economy Low Quality
  • 5. What• Price Lining – offers merchandise in a given category at certain prices – Shirts at $25, $35, $50 – Upper tier is better quality premium brand – Middle tier is for average priced brands – Lower tier for price-conscious customers.
  • 6. WhatOptional Product– setting prices for accessories or options sold with the main product.Captive Product – sets the price for one product low but compensates for that lowprice by pricing the supplies needed to operate that product high.
  • 7. WhatBundle Pricing – several complementary products sold at a single price. – Travel services – Computers and softwareGeographical Pricing – refers to price adjustments required because of the location ofthe customer for delivery of products.
  • 8. Psychological Pricing –techniques that create an illusion
  • 9. Illusions Illusions are very interesting• Odd-Even Pricing – Odd numbers convey a bargain image - - $.79, $9.99, $699 – Even numbers convey a quality image -- $10, $50, $100
  • 10. WhatPrestige Pricing – sets a higher than average price to suggest status Multiple-Unit Pricing – 3 for $.99 Suggests a bargain and helps increase sales volume. Better than selling the same items at $.33 each.
  • 11. WhatEveryday Low Prices (EDLP) – set on a consistent basis
  • 12. What Promotional Pricing -- Used with sales promotion• Loss Leader Pricing – offering very popular items for sale at below-cost prices• Special-Event – Back-to-school specials – Dollar days – Anniversary sales• Rebates and Coupons