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Academic lecture Presentation Transcript

  • 1. INTERACTIVE DISCUSSIONONPRICING STRATEGY
    VASUNDHRA GOEL
    MAFMG -10154
  • 2. “The impact of change in pricing strategies from cost based to market oriented pricing strategy on the profits of Masoom(Non governmental organization)”
  • 3. Masoom special school
    • Masoom, a school for children and youth with special needs is a registered non-governmental organization, situated in Timarpur, North Delhi.
    • 4. 55 children and youth with special needs aged between 6-22 years.
  • Handloom products
    Handloom weaving process
  • 5. “Today you have to run faster to stay in pace”
    (Philip Kotler)
  • 6. Focus area
    Price: how much customers pay for a product
    Product: the features and appearance of goods and services
    Marketing mix
    Place: the point where products are made available to customers
    Promotion: how customers are informed about products
  • 7. How has the concept of price and costing evolved?
    • Exchange of coincidence wants – Barter system
    • 8. Invention of money.
    • 9. Industrial revolution (18th to 19th century):
    Industries
    Factories
    Production
    Costing
    Price
  • 10. Different views……………………………..
    Kotler (1976) and Assael (1985) identified three major strategies to be:1.Cost-oriented - methods based on cost plus mark-up, break-even, and target rate of return.2.Competition-oriented - entailing following the prices of competitors.3.Demand-oriented - pricing based mainly on the going price or customers perceived value.
    But, Gabor (1977) on the other hand classified pricing policies into two basic approaches - cost-based pricing and market-oriented pricing.
  • 11. COST BASED PRICING STRATEGY(Raw materials + labor + overhead )+ profit margin = Price
    (Cost of production)
    • Cost based pricing is the simplest pricing method.
    • 12. The firm calculates the cost of producing the product and adds on a percentage (profit) to that price to give the selling price.
    Cost of production + profit percentage = Selling price
  • 13. But, this all has changed!
    Today – plenty of products available in the market!!!
    Customers have a choice………………
    Now its, the customer who decides the price that he is willing to pay $$$$
  • 14. Question arises??????????????
    Should Masoom continue to sell at Rs 15 – or should they
    do a consumer analysis and develop a pricing strategy
    based on the customer analysis in order to generate more
    profits?
  • 15. This is what is known as MARKET ORIENTED PRICING STRATEGY.
    • Setting a price based upon analysis and research compiled from the targeted market.
    • 16. It is the pricing of products based on the market into which they are going to be sold.
    Today many companies are adopting this strategy.
    For example:
    BRITANNIA BISCUITS
    (Rs 5) (Rs 50)
  • 17. But even the best make mistakes!!!!!!!
    UK leading retailers in clothing, home products and quality food.
    • Launched in India 2005, with their clothing line with up market prices.
    • 18. Assumed that their brand name would sell ,and did not do an intensive customer analysis.
    • 19. DID NOT DO WELL………………IN THE MARKET!
    “Today they have re priced their collections and targeted the pricing at what the market is willing to pay”.
  • 20. BUT, smaller companies without marketing professionals etc.
    are facing a problem as they still follow cost based pricing
    strategy.
    Case study: Increase in profits of Masoom due to shift from cost based pricing to market oriented pricing strategy.
  • 21. Based on a survey conducted by a marketing professional –
    Masoom raised it price per piece by 10%.
    • As a result, the sales in volume stayed the same.
    • 22. But, profits went up by 20%.
  • According to cost based pricing method used by Masoom for mop:
    According to new strategy i.e. market oriented pricing method used by Masoom for mop: