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Pricing strategies

Presentation about the Pricing Strategies which can be used in marketing

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PRICING STRATEGIES
BY
Sriram Purna Kotla
1. Pricing is one of the 4P’s of Marketing Mix which
plays a very Important role .All other P’s are cost
for the company whereas pricing is revenue for the
company
2. Pricing means determining the price of the product
a firm is selling or going to sell
3. While determining a price it involves various
pricing decisions which are to be taken while
deciding a price of a product
4. The price structure of a firm is a major
determinant
What is Pricing ?
● It is the activity under which the activities are aimed at finding the optimum
price of a product
● It typically includes the marketing objectives,Consumer demand,product
attributes,competitors price and market and economic trends
● Finding the right pricing strategy is an important element in running a
successful business.
What is Pricing Strategy ?
Objectives of Pricing Strategy
❏ To earn profits
❏ To increase sales volume
❏ Company Growth
❏ To maintain competitive edge
❏ Survival
❏ To create a good image of the product as
well as about the company
❏ To discourage the competitors to cut the
prices
Objectives of Pricing Strategy ( Contd…..)
Types of Pricing Strategies
Ad

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Pricing strategies

  • 2. 1. Pricing is one of the 4P’s of Marketing Mix which plays a very Important role .All other P’s are cost for the company whereas pricing is revenue for the company 2. Pricing means determining the price of the product a firm is selling or going to sell 3. While determining a price it involves various pricing decisions which are to be taken while deciding a price of a product 4. The price structure of a firm is a major determinant What is Pricing ?
  • 3. ● It is the activity under which the activities are aimed at finding the optimum price of a product ● It typically includes the marketing objectives,Consumer demand,product attributes,competitors price and market and economic trends ● Finding the right pricing strategy is an important element in running a successful business. What is Pricing Strategy ?
  • 4. Objectives of Pricing Strategy ❏ To earn profits ❏ To increase sales volume ❏ Company Growth ❏ To maintain competitive edge
  • 5. ❏ Survival ❏ To create a good image of the product as well as about the company ❏ To discourage the competitors to cut the prices Objectives of Pricing Strategy ( Contd…..)
  • 6. Types of Pricing Strategies
  • 7. Penetration Pricing 1. It is a pricing strategy used by business to attract customers to new product or service 2. The price charged for products and services is set artificially low in order to gain market share. Once this is achieved, the price is increased. 3. It is to lure the customers away from competitors
  • 8. Price Skimming 1. Price skimming sees a company charge a higher price because it has a substantial competitive advantage. 2. The skimming strategy gets its name from skimming successive layers of cream, or customer segments, as prices are lowered over time. 3. As it starts with high pricing therefore it attracts new competitors to enter the market as due to which the price eventually fall
  • 9. Competitive Pricing 1. It is the pricing strategy under which the companies use the prices of their competitors 2. As the company thought that the competitor has set this price by assuming that the competitors have thoroughly worked on the price 3. Therefore, by setting the same price as its competitors, a newly-launched firm can avoid the trial and error costs of the price-setting process.
  • 10. Product Line Pricing 1. Where there is a range of products or services the pricing reflects the benefits of parts of the range 2. It refers to the practice of reviewing and setting prices for multiple products that a company offers in coordination with one another. 3. Effective product line pricing by a business will usually involve putting sufficient price gaps between categories to inform prospective buyers of quality differentials. Also called price lining.
  • 11. Psychological Pricing 1. It is a pricing as well as marketing strategy which means that certain prices have a psychological impact on the customers 2. Retail prices are often expressed as "odd prices": a little less than a round number eg Rs. 199 ,99 etc 3. The theory that drives this is that lower pricing such as this institutes greater demand than if consumers were perfectly rational.
  • 12. Premium Pricing 1. It is also known as image pricing or prestige pricing. It is used when there is a unique brand 2. It is a practice of keeping price of a product artificially high to attract the favourable perceptions among buyers 3. This approach is used where a substantial competitive advantage exists and the marketer is safe in the knowledge that they can charge a relatively higher price.
  • 13. Optional Pricing 1. It is strategy when a company sells a base product at a relatively low price, but sells complementary accessories at a higher price. 2. Companies will attempt to increase the amount customers spend once they start to buy. 3. Optional ‘extras’ increase the overall price of the product or service.
  • 14. Bundle Pricing 1. It is a process where companies sell a package or set of goods or services for a lower price than they would charge if they bought them separately. 2. It is a strategy where it allows the company to increase its profits by giving customers a discount. 3. It is an attempt to capture more of the consumer’s consumer surplus.
  • 15. Cost Based Pricing 1. It is the pricing method in which the company add a certain percentage in the cost of making product to get some profit. 2. It uses manufacturing cost as the basis for coming to the final price setting of the product. 3. It is a straightforward and simple strategy.
  • 16. Cost Plus Pricing 1. It is the simplest pricing strategy. It is also known as mark - up pricing. 2. It is nothing else than adding a markup value to the price of the product. This markup value is for earning profit. 3. It appears to be simple but it ignores the demand and competitors price. Therefore it doesn’t lead to best prices.

Editor's Notes

  1. Example of Android and Apple As android phones are available at a steep discount as compared to Apple phones As android uses this technique and apple uses the price skimming technique
  2. 3rd point explain the demand and supply logic Example of price skimming Apple Phones as whenever the new phones comes with new technology the prices of older models get lower.as the customer always want phone of latest technology
  3. Examples Mc -donalds and other fast food restaurants like Burger king and two washing detergents manufacturer like Surf excel and Ariel
  4. Examples Nike as it has a diversified field of products like in track and field, basketball and soccer. Therefore it has different prices for different categories
  5. Examples Bata uses this as they keep their prices at 299, 399, 99
  6. Examples The car manufacturing company Toyota which has its different line of product for luxury cars that is Lexus, another is the gaming laptops that are launched by different companies such as Asus - ROG, Acer -Predator, Dell -Alienware
  7. Examples Airlines uses this as they charge extra for different things such as extra luggage, confirmed window seat,reserving a row of seats next to each other.
  8. Example of MS Office Where you have to pay the price for one you will get all the MS word,MS powerpoint, MS Excel etc, But if we buy them separately the price will be higher
  9. Example are the retail marketers such as more, big bazzar, they give the products at low prices which lead smaller margin to earn profits but due to lower cost it leads to greater sales which also increase the profits.
  10. Example it is used in every sector from bottle of beer to million dollar infrastructure projects