Pricing
<ul><li>The Price of a Product or Service is the number of monetary units a person pays to obtain one unit of the product ...
Factors to be considered before adopting a Pricing Strategy <ul><li>The demand for the Product/Service in the market </li>...
Price and Non Price Competition <ul><li>A Marketer who resorts to Price competition will compete with the competitors on t...
THE PROCESS OF SETTING PRICES <ul><li>SETTING PRICING OBJECTIVES </li></ul><ul><li>Survival, Profit, Return on Investment,...
SELECTION OF A PRICING POLICY <ul><li>Psychological pricing, Influence of other marketing mix variable, Transfer pricing  ...
APPROACHES TO PRICE ADJUSTMENT <ul><li>Geographical pricing </li></ul><ul><li>Promotional pricing   (general perception th...
Different methods <ul><li>Different methods are...  </li></ul><ul><li>Product line pricing   (price fixed for product line...
Pricing strategies <ul><li>1} cost-plus pricing - </li></ul><ul><li>this pricing method assumes that no product is sold at...
<ul><li>3} break-even pricing   :  it is a point where there is neither loss nor profit, found out by dividing total fixed...
<ul><li>7. Skim the cream pricing  :  it uses a very high introductory price to skim the cream of demand. </li></ul><ul><l...
Effects of Price change on Marketing <ul><li>It will based on … </li></ul><ul><li>Buyers Perceptions on the Price changes ...
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Pricing

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Pricing

  1. 1. Pricing
  2. 2. <ul><li>The Price of a Product or Service is the number of monetary units a person pays to obtain one unit of the product or service </li></ul><ul><li>A Manager should possess a certain level of ingenuity, sufficient skills and sometimes, he has to use his sixth sense while fixing a suitable price for a product or a service </li></ul>
  3. 3. Factors to be considered before adopting a Pricing Strategy <ul><li>The demand for the Product/Service in the market </li></ul><ul><li>Customers perception </li></ul><ul><li>Margin adequate to sustain in the market </li></ul><ul><li>The image of the company in the market </li></ul><ul><li>The expenditure incurred for producing the goods </li></ul><ul><li>Intensity of competition </li></ul>
  4. 4. Price and Non Price Competition <ul><li>A Marketer who resorts to Price competition will compete with the competitors on the price front by offering his product or service at the same price or at a lower price than that of the competitor </li></ul><ul><li>Non Price competition arises when marketers focus on factors other than the price such as Product features, Quality of the product/service being offered, Packaging, Promotions. </li></ul>
  5. 5. THE PROCESS OF SETTING PRICES <ul><li>SETTING PRICING OBJECTIVES </li></ul><ul><li>Survival, Profit, Return on Investment, Market share, Status quo, Product Quality </li></ul><ul><li>FACTORS AFFECTING DEMAND DETERMINATION </li></ul><ul><li>Price Sensitivity, Demand Curve, Price Elasticity of Demand (% change in Quantity Demanded/% change in Price) </li></ul><ul><li>ANALYSING COMPETITORS PRICING </li></ul><ul><li>SELECTION OF A PRICING METHOD </li></ul><ul><li>Mark up pricing (Mark up/cost, Mark up/selling price), Target Return Pricing- Unit cost+ (Desired cost x invested capital)/Unit sales , Perceived value pricing, Going rate pricing, Sealed bid pricing, Differentiated pricing (different prices for the same products at different locations), Value pricing (offers low prices for high quality products), Market skimming, Market penetration </li></ul>
  6. 6. SELECTION OF A PRICING POLICY <ul><li>Psychological pricing, Influence of other marketing mix variable, Transfer pricing (when one division of an organization transfers or sells goods or services to another division, happens in MNC), Pricing impact on other parties (on suppliers, distributors, producers, government, customers) </li></ul>
  7. 7. APPROACHES TO PRICE ADJUSTMENT <ul><li>Geographical pricing </li></ul><ul><li>Promotional pricing (general perception that a price reduction or promotional deal will attract customers ) </li></ul><ul><li>Discriminatory pricing (different customers are charged differently for the same product on the basis of their paying capacity and value of customers ) </li></ul><ul><li>Discounts and Allowances </li></ul><ul><li>Experience curve pricing (new products are introduced at a low price) </li></ul><ul><li>Product mix pricing (demand patterns and market segments vary significantly from product to product) </li></ul>
  8. 8. Different methods <ul><li>Different methods are... </li></ul><ul><li>Product line pricing (price fixed for product lines and not products), </li></ul><ul><li>Optional feature pricing (separate price for accessories that come along with a product eg: car), </li></ul><ul><li>Captive product pricing (manufacturers price the auxiliary products or spare parts relatively higher than the basic product to overcome the low profit earned on the basic product), </li></ul><ul><li>Two- part pricing (fixed price for an initial service and subsequent charges for over and above the minimum service consumed), </li></ul><ul><li>By-Product pricing (setting prices for by products obtained from the original product which sets a way to sustain competitive pressure on the original product), </li></ul><ul><li>Product bundling pricing (manufacturer provides a set of related products at a price eg :PC manufacturers bundles free software (antivirus, office suites ) </li></ul>
  9. 9. Pricing strategies <ul><li>1} cost-plus pricing - </li></ul><ul><li>this pricing method assumes that no product is sold at a loss since the price covers the full cost incurred </li></ul><ul><li>2} Rate of Return or Target pricing method /: </li></ul><ul><li>under this method, first of all , an arbitrary desired rate of profit on the capital employed/invested is determined by the enterprise. The total desired profit is then calculated on the basis of this rate of return. total desired profit is then added to the total cost of production and thus , the price per unit of the product is determined . </li></ul>
  10. 10. <ul><li>3} break-even pricing : it is a point where there is neither loss nor profit, found out by dividing total fixed cost with total no of units produced . This method is good when there is no competition in the market . </li></ul><ul><li>4} marginal cost or incremental cost pricing : in this method, the price is fixed on the basis of additional variable cost associated with an additional out put . </li></ul><ul><li>5} purchasing power pricing : here the price of the product is determined on the basis of what the purchasers can bear or pay . </li></ul><ul><li>6} Competition oriented pricing : here price is fixed after carefully considering the competitor’s price structure. </li></ul>
  11. 11. <ul><li>7. Skim the cream pricing : it uses a very high introductory price to skim the cream of demand. </li></ul><ul><li>8. Market penetration pricing : this is just opposite to the Skim the cream pricing . It offers a very low introductory price to speed up the sales and therefore widening the market base. </li></ul><ul><li>9. Follow the leader pricing : in a competitive market, some big firms assume the role of a leader pricing. When a company starts production in such competitive market, it follows the pricing of policy of such leader firms. </li></ul>
  12. 12. Effects of Price change on Marketing <ul><li>It will based on … </li></ul><ul><li>Buyers Perceptions on the Price changes </li></ul><ul><li>Competitors Reactions </li></ul><ul><li>…………………………………………… . </li></ul>

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