1. PRICING
Presented by
Dipika Paneru
Garima Dawadi
Himalaya Ban

3. A case of
• Tata CDMA formed alliance with NTT DOCOMO
2008
It 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

4. Pricing
• One of the element of the
marketing mix that produces
revenue; the others produce
costs.
• South Asian consumers are
extremely price and value
sensitive
• They seek more benefits for
same price

5. Consumer Psychology and Pricing
Reference Prices
Price-quality inferences
Price endings

6. Steps in Setting Price
Select the price objective
Determine demand
Estimate costs
Analyze competitor price mix
Select pricing method
Select final price

7. Step 1: Selecting the Pricing Objective
• Survival
• Maximum current profit
• Maximum market share
• Maximum market
skimming Eg. Iphone
• Product-quality leadership
Eg. Rollys Royce

8. Step 2: Determining Demand
Price Sensitivity
Estimating
Demand Curves
Price Elasticity
of Demand

9. Inelastic and Elastic Demand

10. Step 3: Estimating Costs
• Types of costs and levels of production
• Accumulated production
• Target costing

11. Cost per Unit as a Function of
Accumulated Production

12. Step 4: Analyzing Competitors
• Costs
• Prices
• Offers

13. Step 5: Selecting a Pricing Method
• Markup pricing
• Target-return pricing
• Perceived-value pricing
• Value pricing
• Going-rate pricing
• Auction-type pricing

14. Break-Even Chart

15. 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

16. Adapting the Price
Geographical Pricing
Discounts/Allowances
Differentiated Pricing
Promotional Pricing

17. Geographical Pricing
• Free on board price
• Zone Delivered Price
• Basing Point Price
• Uniform Delivered Price
• Freight Absorption Price

18. Discounts and Allowances
• Discount
• Quantity Discount
• Functional Discount
• Seasonal Discount
• Allowance

19. Promotional Pricing Tactics
• Loss-leader pricing
• Special-event pricing
• Cash rebates
• Low-interest financing
• Longer payment terms
• Warranties and service
contracts
• Psychological discounting

20. Differentiated Pricing
• First Degree Pricing
• Second Degree Pricing
• Third Degree Pricing

21. Initiating to Price Changes
Initiating Price Cuts
• Low-quality trap
• Fragile-market-share trap
• Shallow-pocket trap
• Price-war trap
Initiating Price Increases
• Delayed quotation pricing
• Escalator clauses
• Unbundling
• Reduction of discounts

22. Responding to Competitors’ Price
Changes
• Homogeneous Product
• Non-Homogeneous Product