• Like
  • Save
Delegation & Empowerment
Upcoming SlideShare
Loading in...5
×
 

Delegation & Empowerment

on

  • 2,171 views

 

Statistics

Views

Total Views
2,171
Views on SlideShare
2,171
Embed Views
0

Actions

Likes
4
Downloads
133
Comments
0

0 Embeds 0

No embeds

Accessibility

Categories

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    Delegation & Empowerment Delegation & Empowerment Presentation Transcript

    • WHAT IS PRICE
      • RENT FOR APARTMENT
      • TUTION FOR EDUCATION
      • FEE FOR DENTIST/DOCTOR
      • FARE FOR AUTORICKSHAW
      • RATE FOR ELECTRICITY/WATER/GAS
      • TOLL FOR ROAD-EXPRESS HIGHWAY
      • PREMIUM FOR INSURANCE
    • WHAT IS PRICE
      • HONARARIUM FOR GUEST LECTURER
      • RETAINER FOR LAWYER/ADVISOR
      • SALARY FOR EXECUTIVE
      • COMMISSION FOR SALESMAN
      • BRIBE FOR CORRUPT PERSONNEL
      • WAGE FOR WORKMAN
      • TAX FOR GOVERNANCE
      • SITTING FEE FOR DIRECTORS
      • ?
      • WHAT IS PRICE
      • WHO SETS THE PRICE
      • HOW IS IT SET
    • WHEN TO SET A PRICE
      • INTRODUCING A NEW PRODUCT
      • INTRODUCING IN THE NEW CHANNEL/MARKET
      • BIDS ON NEW CONTRACT WORK
    • POSITIONING ON QUALITY AND PRICE MARUTI 800 PRICE ALONE ZEN ME TOO BUT CHEAPER ESTEEM EASE/CONVENIENCE OPEL – OCTRA MIDDLE LANCER – QUALIS SPECIAL NEEDS CAMI-TOYOTA-BMW LUXURY MERCEDES-BENZ ULTIMATE EXAMPLE (AUTOMOBILES) SEGMENT
    • Nine Price-Quality Strategies 9.Economy Strategy 8.False economy Strategy 7.Rip-off Strategy Low 6.Good-value Strategy 5.Medium-value Strategy 4.Overcharging Strategy Medium 3.Super-value Strategy 2.High Value Strategy 1.Premium Strategy High Low Medium High P R O D C T quality Price
    • Price-Quality Strategies
      • THE DIAGONAL STRATEGIES- 1,5,9 CAN CO-EXIST IN THE SAME MARKET.
      • THE CELLS ABOVE THE DIAGONAL ARE STRATEGIES 2,3 AND 6.THESE ARE WAYS TO ATTACK THE DIAGONAL POSITIONS.
      • POSITIONING STRATEGIES 4,7,AND 8 –THERE IS AN OVER-PRICING OF THE PRODUCT IN RELATION TO ITS QUALITY.
    • SIX STEP PROCEDURE FOR PRICE SETTLING
      • SELECTING THE PRICING OBJECTIVES
      • DETERMING DEMAND
      • ESTIMATING COST
      • ANALYZING COMPETITORS, COSTS, PRICES AND OFFERS
      • SELECTING A PRICING METHOD
      • SELECTING THE FINAL PRICE
    • SELECTING THE PRICING OBJECTIVES
      • SURVIVAL
      • MAXIMUM CURRENT PROFIT
      • MAXIMUM SALES GROWTH
      • MAXIMUM MARKET SKIMMING
      • PRODUCT QUALITY LEADERSHIP
      • OTHER PRICING OBJECTIVE
    • DETERMINING DEMAND
      • DEMAND HAS AN INVERSE RELATIONSHIP WITH PRICE – CETRIS PARIBUS
    • INELASTIC AND ELASTIC DEMAND dy 5 dx 30 PRICE 15 10 10 20 30 QTY DEMAND dx 5 dy 10 RELATIVELY IN ELASTIC DEMAND dx 5 dy 30 MORE ELASTIC DEMAND PRICE 15 10 10 20 30 QTY DEMAND dy 5 dx 10
    • FACTORS AFFECTING PRICE SENSITIVITY
      • UNIQUE VALUE EFFECT
      • SUBSTITUTE AWARENESS EFFECT
      • DIFFICULT COMPARISON EFFECT
      • TOTAL EXPENDITURE EFFECT
      • END BENEFIT EFFECT
      • SHARED COST EFFECT
      • SUNK INVESTMENT EFFECT
      • PRICE – QUALITY EFFECT
      • INVENTORY EFFECT
      • BUYERS ARE NORMALLY PRICE SENSITIVE.
      • HOWEVER THE FOLLOWING LIST OF FACTORS ARE ASSOCIATED WITH LOWER PRICE SENSITIVITY
      • ( TOM NAGLE):
      • 1) THE PRODUCT IS MORE DISTINCTIVE
      • ( ROLLS-ROYCE)
      BUYERS & PRICE SENSITIVITY
      • 3) BUYERS CANNOT EASILY COMPARE THE QUALITY OF SUBSTITUTES. ( OPEN HEART SURGERY)
      2) BUYERS ARE LESS AWARE OF SUBSTITUTES ( PETROL AND DIESEL) 4) THE EXPENDITURE IS A SMALLER PART OF THE BUYER’S TOTAL INCOME. (COSMETICS, SALT, PERFUMES)
      • 5) THE EXPENDITURE IS SMALL COMPARED TO THE TOTAL COST OF THE END PRODUCT.
      • ( FURNISHING OF THE HOUSE, INK FOR A PEN, REFILL FOR A PRINTER)
      • 6)PART OF THE COST IS BORNE BY ANOTHER PARTY.
      • ( MEDICAL INSURANCE)
      7) THE PRODUCT IS USED IN CONJUNCTION WITH ASSETS PREVIOUSLY BOUGHT. ( SPARE PARTS FOR MACHINERIES)
      • 8) THE PRODUCT IS ASSUMED TO HAVE MORE QUALITY, PRESTIGE, OR EXCLUSIVENESS.
      • ( PAINTINGS, JEWELLERY)
      9) BUYERS CANNOT STORE THE PRODUCT ( PERISHABLE ESSENTIAL COMMODITIES)
    • METHODS OF ESTIMATING DEMAND V/S PRICES
      • STATISTICALLY ANALYSING PAST RELATIONSHIP
      • PRICE EXPERIEMENTS
      • BUYER RESPONSE
    • PRICE ELASTICITY OF DEMAND IT IS IMPORTANT TO KNOW THE PRICE ELASTICITY OF DEMAND TO FIX THE PRICE. DEMAND IS LESS ELASTIC UNDER THE FOLLOWING CONDITIONS Contd…
      • NO OR FEW SUBSTITUTES
      • ESSENTIALS
      • BUYERS REALLY CANNOT NOTICE THE PRICE CHANGE
      • THE PRODUCT BECOMES MORE ESSENTIAL / NEEDED / PEAK DEMAND
      • BUYERS ARE SLOW TO CHANGE THEIR BUYING HABITS
      • HIGHER PRICES ARE JUSTIFIED ON QUALITY VALUE
    • ESTIMATING COST
      • DEMAND SETS A CEILING ON PRICE.
      • COST SETS THE FLOOR ON PRICE
      • TYPES OF COST
        • FIXED
        • VARIABLE
    • FACTORS TO BE CONSIDERED IN COSTING
      • COST BEHAVIOUR AT DIFFERENT LEVELS OF PRODUCTION PER PERIOD
      • COST BEHAVIOUR AS A FUNCTION OF ACCUMULATED PRODUCTION
      • COST BEHAVIOUR AS A FUNCTION OF DIFFERENTIATED MARKETING OFFERS. i.e ACTIVITY BASED COSTING INSTEAD OF STANDARD COSTING
      • TARGET COSTING – JAPANESE METHOD
    • ANALYSING COMPETITORS COSTS, PRICES AND OFFERS
      • TO FIND OUT THE COMPETITIVE COSTS, PRICES AND OFFERING IS REQUIRED -
        • TO BENCH MARK
        • TO FIND OUT COMPARATIVE ADVANTAGES
    • SELECTING A PRICING METHOD
      • THREE “C” MODEL FOR PRICE SETTING
        • CUSTOMERS DEMAND SCHEDULE
        • COST FUNCTION
        • COMPETITORS PRICE
      • MARKUP PRICING
      • TARGET RETURN PRICING
      • GOING – RATE PRICING
      • RETENTION PRICING
      • ADMINISTERED PRICE MECHANISM
      • DIFFERENTIAL PRICING
      • SEALED BID PRICING
      • BLACK MARKET PRICING
      PRICING METHODS
    • SELECTING A PRICING METHOD
      • MARK UP PRICING
      • COST ≠ PLUS –
      • ADD A STANDARD MARKUP TO THE PRODUCTS COSTS
      LOW PRICE HIGH PRICE NO PROFIT NO DEMAND AT THIS PRICE AT THIS PRICE COSTS COMPETITOR CUSTOMER PRICE AND PRICES ASSESMENT OF SUBSTITUTES OF UNIQUE PRODUCT VALUE
      • DOLL MANUFACTURER
      • VARIABLE COST PER UNIT Rs 10
      • FIXED COST Rs 3,00,000
      • EXPECTED UNIT SALES 50,000 Nos
      • UNIT COST = VC + FC = 10 + 3,00,000 = Rs 16
      • SALES 50,000
      • ASSUME THE MANUFACTURER WANTS20%FOR MARK UP ON SALES. THE MARKUP IS GIVEN BY ?
      • MARKUP = UNIT COST = 16 = Rs 20
      • PRICE 1 - DESIRED 1 - 0.2
      • RETURN ON
      • SALES
      • SUPPOSE THE DEALER WANTS 50%-FOR SELLING PRICE. WHAT SHOULD BE HIS MARKUP PRICE?
      MARKUP = UNIT COST = 20 = Rs 40 PRICE 1 - DESIRED 1 - 0.5 RETURN ON SALES Rs 40 PER UNIT
      • THIS IS A MODIFICATION OF COST PRICING APPROACH. THE PRICE WILL GIVE THE TARGET RATE RETURN ON INVESTMENT (ROI)
      IN THE ABOVE CASE, IF THE DOLL MANUFACTURER INVESTED Rs 10 LAKHS IN HIS BUSINESS AND HE WANTS TO ACHIEVE A ROI OF 20% HE WILL APPLY THE FOLLOWING FORMULA TRP = UNIT COST + DESIRED RETURN x INVESTED CAPITAL UNIT SALES 16 + .20 x 1,00,000 = Rs 20 50,000
      • TO KNOW THE BREAK EVEN VOLUME
      BREAK EVEN VOLUME = FIXED COST = 3,00,000 = 30,000 UNIT SALES 20 – 10 1200 ▬ 1000 ▬ 800 ▬ 600 ▬ 400 ▬ 200 ▬ 10 20 30 40 50 SALES TC FC BEP REVENUE
      • PERCEIVED – VALUE PRICING :
      • THIS PRICING IS BASED ON THE PRODUCTS PERCEIVED VALUE. WHAT IS THE BUYERS PERCEPTION OF VALUE AND NOT SELLERS COST IS BASED FOR FIXING THE PRICE
      • VALUE PRICING
      • CHARGING FAIRLY LOW PRICE FOR A HIGH QUALITY OFFERING
      • GOING – RATE PRICING – MOSTLY BASED ON COMPETITORS PRICE
      • RETENTION PRICING – (GOVT)
      • ADMINISTERED PRICE MECHANISM – (GOVT)
      • DIFFERENTIAL PRICING
      • SEALED BID PRICING
      • BLACK MARKET PRICING – (SHORTAGE SITUATION)
    • SELECTING THE PRICE
      • APART FROM PRICING METHOD, THE COMPANY WOULD CONSIDER ADDITIONAL FACTORS SUCH AS -
        • PSYCHOLOGICAL PRICING
        • OTHER MARKETING MIX ELEMENTS
        • COMPANY PRICING POLICIES
        • IMPACT OF PRICE ON OTHER FACTORS
        • LEGAL ENVIRONMENT
    • ADAPTING THE PRICE
      • GEOGRAPHICAL PRICING - (CASH, COUNTER TRADE AND BARTER)
      • COUNTER TRADE TAKES THE FOLLOWING FORMS :
        • BARTER – GOODS FOR GOODS
        • COMPENSATION DEAL – SOME % IN CASH, THE BALANCE IN GOODS
        • BUY BACK ARRANGEMENT – SELLS PLANT, EQUIPMENT, TECHNOLOGY AND BUY BACK PART OF THE PRODUCT MANUFACTURED
        • OFFSET – THE SELLER RECEIVES FULL PAYMENT IN CASH BUT AGREES TO SPEND A SUBSTANTIAL AMOUNT IN THAT COUNTRY IN A STATED TIME PERIOD
    • PRICE, DISCOUNTS AND ALLOWANCES
      • COMPANIES REWARDS CUSTOMERS FOR EARLY PAYMENTS, VOLUME PURCHASES AND OFF SEASON BUYING. THEY ARE CALLED
        • DISCOUNTS
        • ALLOWANCES
        • REBATES
    • QUANTITY DISCOUNTS - THIS IS GIVEN FOR CERTAIN VOLUME PURCHASES. FUNCTIONAL DISCOUNTS – THEY ARE ALSO CALLED TRADE DISCOUNTS. THIS IS FOR CHANNEL MEMBERS LIKE DISTRIBUTORS, WHOLESALERS, RETAILERS, STOCKISTS, BROKER AGENTS. THIS IS A REWARD FOR STOCK KEEPING, WAREHOUSING, FORWARDING, CLEARING, ACCOUNTING, BILLING, FINANCING, GUARANTEEING etc,.
    • ALLOWANCES - TRADE IN ALLOWANCE (FOR GIVING THE OLD MODEL LIKE OLD TV OR OLD CAR) PROMOTIONAL ALLOWANCE – THESE ARE PAYMENTS OR PRICE REDUCTION TO DEALERS IN PARTICPATING IN ADVERTISING AND SALES PROMOTIONAL PROGRAMS
    • REBATES - REBATES ARE GIVEN TO STIMULATE SALES – REBATES ARE NORMALLY PASSED ON TO THE BUYER. KHADI & VILLAGE INDUSTRIES DEVELOPMENT BOARD GIVE FESTIVAL REBATES FOR THEIR PRODUCTS ESPECIALLY TEXTILES
    • PROMOTIONAL PRICING
      • SEVERAL PRICING TECHNIQUES ARE USED TO STIMULATE EARLY PURCHASE AND ALSO INCREASE SALES. THEY ARE
        • LOSS LEADER PRICING
        • SPECIAL EVENT PRICING
        • CASH REBATES
        • LOW INTEREST FINANCING
        • LONGER PAYMENT TERMS
        • WARRANTIES AND SERVICE CONTRACTS
        • PSYCHOLOGICAL DISCOUNTING
    • PROMOTIONAL PRICING LOSS LEADER PRICING - SUPER MARKETS DROPS PRICES ON WELL KNOWN BRANDS. THIS ATTRACTS MORE CUSTOMERS TO THEIR SHOPS AND INCREASE TOTAL SALES. SPECIAL EVENT PRICING - TO ATTRACT CUSTOMERS IN CERTAIN SEASONS – LIKE ONAM, CHRISTMAS, DIWALI etc,. CASH REBATES - THIS IS GIVEN TO BUYERS LOW INTEREST FINANCING – CAR DEALERS LONGER PAYMENT TERMS WARRANTIES AND SERVICE CONTRACTS PSYCHOLOGICAL DISCOUNTING - ORIGINAL PRICE Rs 500 NOW ONLY Rs 399/-
    • KOTLER SAYS, “ PROMOTIONAL PRICING IS ZERO SUM GAME. THEY WORK, COMPETITORS COPY THEM AND ITS EFFECT IS LOST. IF THEY DO NOT WORK, THEY WASTE COMPANY MONEY”.
    • DISCRIMINATORY PRICING
      • CUSTOMER SEGEMENT PRICING – PARKS, MUSEUMS, RAILWAYS
      • PRODUCT FORM PRICING – DIFFERENT PACKING
      • IMAGE PRICING – PERFUME
      • LOCATION PRICING – SEATS IN A THEATRE
      • TIME PRICING – UTILITIES – HOLIDAY RESORTS, AIRLINES
      • FOR PRICE DISCRIMINATION CERTAIN CONDITIONS MUST EXIST.
        • MARKET MUST BE SEGMENTABLE
        • LOWER PRICE SEGMENT MUST NOT BE ABLE TO RESELL THE PRODUCT TO HIGHER SEGMENT
        • COMPETITORS SHOULD NOT BE ABLE TO UNDER SELL AT HIGHER PRICE SEGEMENT
        • PRACTICE SHOULD NOT BREED CUSTOMER RESENTMENT
        • SHOULD NOT BE ILLEGAL
    • IN A CONTROLLED ECONOMY, ESPECIALLY IN SHORTAGE SITUATION THE GOVERNMENT OR PUBLIC AUTHORITIES ENFORCE DISCRIMINATORY PRICE FOR EQUITABLE DISTRIBUTION OF ESPECIALLY ESSENTIAL ITEMS AND UTILITIES. IT IS CONTROLLED BY RATIONING, PERMIT, QUOTA, AND PRICE FIXING. THIS ALWAYS LEADS TO BLACK MARKET, BLACK MARKET ECONOMY AND BLACK MARKET PRICES. WHY ?
    • PRODUCT MIX PRICING WHEN A PRODUCT IS A PART OF A PRODUCT MIX, THE PRICING IS MODIFIED TO TAKE CARE OF THE TOTAL REVENUE FROM ALL PRODUCTS AS A MIX. THE COMPANY HERE FIX THE PRICE TO MAXIMISE THE TOTAL REVENUE AND PROFIT. THERE ARE SIX SITUATIONS WHERE PRODUCT MIX PRICING IS ADOPTED
        • PRODUCT LINE PRICING – LIKE A SHOE SHOP OR CLOTH SHOP – DIFFERENT PRICES FOR PRODUCTS IN THE SAME LINE
        • OPTIONAL FEATURE PRICING – EXTENSIVELY ADOPTED BY AUTOMOBILES
        • CAPTIVE PRODUCT PRICING – RAZOR BLADES AND RAZORS. FILMS & CAMERAS
        • TWO – PART PRICING – AS IN TELEPHONE FIXED RENT AND CALL CHARGES AS PER USE
        • BY PRODUCT PRICING
        • PRODUCT – BUNDILING PRICES – SEASON TICKETS IN THEATRES AND RAILWAYS
    • INITIATING AND RESPONDING TO PRICE CHANGES
      • INITIATING PRICE CUTS:
        • EXCESS PLANT CAPACITY
        • DECLINING MARKET SHARE
        • DRIVE TO DOMINATE THE MARKET THROUGH LOWER COST
    • INITIATING AND RESPONDING TO PRICE CHANGES
      • INITIATING PRICE INCREASE:
        • TO INCREASE PROFIT
        • TO OFFSET COST INFLATION
        • TO EXPLOIT OVER DEMAND
        • TO FOLLOW THE COMPETITOR / MARKET LEADER
    • INITIATING AND RESPONDING TO PRICE CHANGES
      • PRICE ADJUSTMENTS:
        • USE OF ESCALATOR CLAUSES
        • PERFORMANCE LINKED PRICING
      • REACTIONS TO PRICE CHANGES:
        • CUSTOMER REACTION
        • COMPETITORS REACTION
        • AUTHORITIES REACTION
        • PUBLIC REACTION
      • RESPONDING TO COMPETITORS PRICE CHANGES:
        • MAINTAIN PRICE
        • RAISE PERCEIVED QUALITY
        • REDUCE PRICE
        • INCREASE PRICE AND IMPROVE QUALITY
        • LAUNCH LOW-PRICE FIGHTER LINE