Pricing

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LEAD College of Management

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Pricing

  1. 1. MONEYHONEYPRICING STRATEGY Aravind T S LEAD College of Management
  2. 2. WHAT IS MEANT BY PRICE ? price is the quantity of payment or compensation given by one party to another in return for goods or services.
  3. 3. Revenuegenerating
  4. 4. PRICING The only part of marketing mix that is revenue generating all the others are cost Pricing is the process of determining what a company will receive in exchange for its products .
  5. 5. SETTING THE PRICE1. Selecting objective2. Determining demand3. Estimating costs4. Analyzing competitors cost,price and offers5. Selecting a pricing method6. Selecting final price
  6. 6. STEP.1 – SELECTING PRICING OBJECTIVE Survival :-Short term pricing objective are set in order to survive Profit :- The objective is to maximise profit Return on investment :-Price are set to attain a specified return on the companies investment Maximum market share :- Higher sales volume will lead to lower unit costs and higher long-run profit. They set the lowest price (IKEA) Maximum market skimming :- companies unveiling a new technology favour setting high price to maximise market skimming .price starts high and slowly rollback Product quality leadership :- Starbucks , CCD, BMW , Mercedes,Taj have positioned as leaders in quality , with premium pricing and very loyal customer base
  7. 7. STEP.2 - DETERMINING DEMAND Each price will lead to a different impact on a company’s marketing objectiveInelastic Demand:-the situation in which the supply and demand for a good are unaffected when the price of that good or service changes. Inelastic Demand : demand fora product is sensitive to pricechanges
  8. 8. ESTIMATING COST Fixed cost : salaries, rent ,intrest Variable cost : vary directly with the level of production. Total cost : Fixed + Variable cost Average cost : Cost per unit .
  9. 9. ANALYZING COMPETITORS COST,PRICE ANDOFFERS The firm must take competitors cost , price , and possible price reactions .
  10. 10. FIXING THE PRICING The price of the product should be determined in such a way as to give a fair return to the producer, a good margin to the middlemen and a reasonable price to the consumer .
  11. 11. PREMIUM PRICING Use a high price where there is a unique brand. 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
  12. 12. SKIMMING A very high price is fixed by a company for a new product Earn max profit at earliest Deliberate to built up the image of quality and prestige of the product . Only for specialty goods No competition , if yes then showing competitive advtage
  13. 13. BAIT Two products are manufactured by a firm, and the price of one product is kept low and the price of the other product is kept high . Selling high price product by showing the low price Eg : Car, Fast food , Computers
  14. 14. PSYCHOLOGICAL PRICING. This approach is used when the marketer wants the consumer to respond on an emotional, rather than rational basis. For example Price Point Perspective (PPP) 0.99 Paise not 1 rupee. Eg:- Bata
  15. 15. PRODUCT LINE PRICING. Different products of different prices are manufactured , but the price of all the product are determined in a line Say as :- 25,35, 40 etc
  16. 16. OPTIONAL PRODUCT PRICING Companies will attempt to increase the amount customers spend once they start to buy. For example airlines will charge for optional extras such as guaranteeing a window seat or reserving a row of seats next to each other.
  17. 17. PROMOTIONAL PRICING. Pricing to promote a product is a very common application. There are many examples of promotional pricing including approaches such as BOGOF (Buy One Get One Free), money off vouchers and discount
  18. 18. PRODUCT BUNDLE PRICING. Here sellers combine several products in the same package. his also serves to move old stock. Blu-ray and videogames are often sold using the bundle approach once they reach the end of their product life cycle.
  19. 19. GEOGRAPHICAL PRICING. Geographical pricing sees variations in price in different parts of the world. shipping costs increase price n some countries there is more tax on certain types of product which makes them more or less expensive
  20. 20. VALUE PRICING This approach is used where external factors such as recession or increased competition force companies to provide value products and services to retain sales e.g. value meals at McDonalds and other fast-food restaurants. http://www.youtube.com/watch?v=LX7gfhv2o 5U
  21. 21. PENETRATION PRICING The price charged for products and services is set artificially low in order to gain market share. http://www.youtube.com/watch?v=EPYOlJ9t BHM
  22. 22. ECONOMIC PRICING This is a no frills low price. The costs of marketing and promoting a product are kept to a minimum. Budget airlines are famous for keeping their overheads as low as possible and then giving the consumer a relatively lower price to fill an aircraft. The first few seats are sold at a very cheap price (almost a promotional price) and the middle majority are economy seats, with the highest price being paid for the last few seats on a flight (which would be a premium pricing strategy). http://www.youtube.com/watch?v=jmNrvlQ73pU
  23. 23. CHANGING PRICING ENVIRONMENT Buyers can : Get instant price comparison from thousand of vendors (Eg: mysimon.com, flipcart,pricescan.com) Name there price and have it met (priceline.com) Get products free : Free software movement that started
  24. 24. FREEMIUM STRATEGY My space Skype Adobe gave away PDF reader for free in 1994
  25. 25. PRICE STGY: OF GINGEREarly Booking Offer: SAVE NOW" Book Early and Pay Less with Ginger Hotels (Book today & take advantage of our Early Booking Offer. Upto 15% off on advance booking.)1. 10% flat discount on room tariff when booking 7 days in advance2. 15 % flat discount on room tariff by booking 15 days in advance.
  26. 26. GINGER SPECIAL OFFERS Day Use Rates: Introducing special day use rates for travelers to freshen up or relax before heading for work. Weekend offer: 10% Off on a 1-night stay 20% on a 2-night stay 30% on a 3-night stay
  27. 27.  Length of Stay offer:The longer the stay the better the discount and the more enjoyable your stay at any Ginger Hotel. 20% Off on stays for 2 nights or more. All Hotels except Jamshedpur and RYN-New Delhi. 30% Off on stays for 3 nights or more – Applicable only at Pondicherry, Mangalore, Pune- Wakad, Goa, Indore, Guwahati, Agartala, Ludhi ana, East Delhi and Manesar.

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