group presntation on the adaptation, initation and response to price chage.

1. PRICING STRATEGY
Developing
Presenter : Group 5 (Aditya,
Benish, Nikita,Sneha,
Shreyeshkar)

2. Adapting The Price
Initiating Price
Changes
Responding to
Price Changes
What we’ll cover?

3. Adapting The Price
Geographical Pricing
• How to price its products to different customers in different locations and
countries?
• How to get paid?
Counter-trade:
Barter system
Compensation deal
Buy-back agreement
Offset
• Companies – do not set a single price, rather develop a pricing structure.

4. Price Discounts and Allowances
• Reasons:
• Early payments
• Volume purchase(order in bulk)
• Off-season buying
• Allowance to maintain demand
Types:
• Discount
• Quantity discount
• Functional/ Trade discount
• Seasonal discount
• Allowance
Discounting can be a useful tool when customer--
Sign a longer contract.
Order electronically.
Buy larger quantities.

5. Promotional Pricing
• Offering a product at a price below minimum profit margin,
sometimes below its cost, to stimulate additional store traffic.
• Idea – to make up for the losses on highlighted product with
additional purchases of profitable goods.
Loss- Leader Pricing

6. Promotional Pricing
• Offering reduced prices or exclusive promotions during specific
occasions or events.
• Idea – to draw in more customers and make up by volume sales.
Special Event Pricing

7. Promotional Pricing
• Providing discounted prices to specific customer/ customer
segments based on criteria such as loyalty, age, or occupation
•
• Idea – to gain/ retain loyalty.
Special Customer Pricing

8. Promotional Pricing
• Offering a partial refund to customers after the purchase of a
product
• Idea – to encourage purchase within specified time period/ clear
inventories.
Cash Rebates

9. Promotional Pricing
• Providing customers with financing options at a reduced interest
rate or zero interest
• Idea – to stimulate sales of products that customers finds is out of
his/her pocket.
Low- interest financing

10. Promotional Pricing
• Allowing customers to extend their payment period beyond the
usual terms.
• Idea – similar to low- interest financing (customer worry about
affordability of EMI rather than the price of product itself.
Longer- Payment Terms

11. Promotional Pricing
• Providing additional value to customers through warranties or
service contracts at no extra cost or for a reduced price
• Idea – promote sales by adding a free or low-cost warranty service
contract
Warranties and Service Contracts

12. Promotional Pricing
• Creating the perception of a discount or deal through pricing
strategies, even if the actual price reduction may be minimal
• Idea – Enticing customers to buy more items than they initially
intended by creating a false perception of reduced price
Psychological discounting

13. Differentiated Pricing
• Companies often adjust their basic price to accommodate
differences among customers, products, locations and so on.
• Price differentiation occurs even if there is no relative
differences in costs.
• First degree Price Differentiation: Separate price to EACH
customers.
• Second degree Price Differentiation: Price charged is affected by
QUANTITY purchased.
• Third degree Price Differentiation: Different prices to different
CLASSES of buyers.

14. Forms of Third Degree Price Differentiation
• Customer-segment pricing.
• Product-form pricing.
• Image pricing.

15. • Channel pricing.
• Location pricing.
• Time pricing.

16. Initiating price cuts
• Reduction in the price of a product or
service
• To
• Win new customers
• Increase market share
• Remain competitive

17. Possible traps led by
price cutting
• Low-quality trap
• Fragile-market-share trap
• Shallow-pockets trap
• Price –war traps

18. Initiating price
increases
• Increment in the price of a
product or service
WHY?
• Cost inflation
• Enhanced product or service
value
• Demand-driven pricing

19. How Companies increase
prices
• Delayed quotation pricing
• Escalator clauses:
• Unbundling:
• Reduction of Discounts
19

20. Anticipating Competitive Responses
Change of prices can
trigger responses from
customers, competitors,
distributors, suppliers,
and government.
Competitor reactions are
more likely when there
are few firms,
homogeneous products,
and well-informed buyers.

21. Anticipating Competitor Reactions
Assumptions
• Competitors may
react in a standard
way to price changes
or treat each
difference as a fresh
challenge based on
self-interest.
• Understanding
competitor behavior
is essential for
effective planning.
Researching
Competitors
• Investigate
competitors'
financial situation,
recent sales,
customer loyalty,
and corporate
objectives.
• This data helps in
predicting potential
reactions.
Competitor Objectives
and Responses
• Market Share
Objective:
Competitors may
match price
differences to
maintain their
market share.
• Profit Maximization
Objective:
Competitors may
increase advertising
or enhance product
quality.

22. Challenges in
Anticipating
Competitive Responses
• They might perceive it as an attempt to steal
market share, struggling performance, or
industry-wide price reduction to stimulate
demand.
Interpretations of Price Changes:
• Competitors can have diverse strategies and
objectives.
• Predicting their reactions accurately can be
challenging.
Complexity of Competitor Behavior:

23. Product life cycle and
portfolio importance
Competitor intentions
and resources
Market's price and
quality sensitivity
Cost behavior with
volume
Alternative
opportunities
Factors to consider competitors 'price change
Product life cycle
and portfolio
importance
Competitor
intentions and
resources
Market's price
and quality
sensitivity
Cost behavior
with volume
Alternative
opportunities

24. Response strategies in non-homogeneous product
market
ANALYZE REASONS AND
PERMANENCE OF COMPETITOR'S
PRICE CHANGE
EVALUATE IMPACT ON MARKET
SHARE AND PROFIT
ANTICIPATE COMPETITOR AND
OTHER FIRM RESPONSES

25. Strategies for marketers:
• Further differentiate the product or service
• Introduce a low-cost venture
• Reinvent as a low-cost player
Strategies against low-cost competitors
Anticipate changes to respond quickly to changes
Prepare contingency responses

26. THANK YOU
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