Pricing in Marketing

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Pricing in Marketing

  1. 1. PRICINGPresented byDipika PaneruGarima DawadiHimalaya Ban
  2. 2. A case of• Tata CDMA formed alliance with NTT DOCOMO2008It Offered• Pay per-second basis• A per character charge for SMS• Unlimited GPRS @ Rs. 95• Change Plan Daily• Crossed 1 million fan on 2011• Celebrated by doubling their talk time offer
  3. 3. Pricing• One of the element of themarketing mix that producesrevenue; the others producecosts.• South Asian consumers areextremely price and valuesensitive• They seek more benefits forsame price
  4. 4. Consumer Psychology and PricingReference PricesPrice-quality inferencesPrice endings
  5. 5. Steps in Setting PriceSelect the price objectiveDetermine demandEstimate costsAnalyze competitor price mixSelect pricing methodSelect final price
  6. 6. Step 1: Selecting the Pricing Objective• Survival• Maximum current profit• Maximum market share• Maximum marketskimming Eg. Iphone• Product-quality leadershipEg. Rollys Royce
  7. 7. Step 2: Determining DemandPrice SensitivityEstimatingDemand CurvesPrice Elasticityof Demand
  8. 8. Inelastic and Elastic Demand
  9. 9. Step 3: Estimating Costs• Types of costs and levels of production• Accumulated production• Target costing
  10. 10. Cost per Unit as a Function ofAccumulated Production
  11. 11. Step 4: Analyzing Competitors• Costs• Prices• Offers
  12. 12. Step 5: Selecting a Pricing Method• Markup pricing• Target-return pricing• Perceived-value pricing• Value pricing• Going-rate pricing• Auction-type pricing
  13. 13. Break-Even Chart
  14. 14. Step 6: Selecting the Final Price• Impact of other marketing activities• Company pricing policies• Gain-and–risk sharing pricing• Impact of price on other parties
  15. 15. Adapting the PriceGeographical PricingDiscounts/AllowancesDifferentiated PricingPromotional Pricing
  16. 16. Geographical Pricing• Free on board price• Zone Delivered Price• Basing Point Price• Uniform Delivered Price• Freight Absorption Price
  17. 17. Discounts and Allowances• Discount• Quantity Discount• Functional Discount• Seasonal Discount• Allowance
  18. 18. Promotional Pricing Tactics• Loss-leader pricing• Special-event pricing• Cash rebates• Low-interest financing• Longer payment terms• Warranties and servicecontracts• Psychological discounting
  19. 19. Differentiated Pricing• First Degree Pricing• Second Degree Pricing• Third Degree Pricing
  20. 20. Initiating to Price ChangesInitiating Price Cuts• Low-quality trap• Fragile-market-share trap• Shallow-pocket trap• Price-war trapInitiating Price Increases• Delayed quotation pricing• Escalator clauses• Unbundling• Reduction of discounts
  21. 21. Responding to Competitors’ PriceChanges• Homogeneous Product• Non-Homogeneous Product

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