Pricing And Marketing


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Pricing And Marketing

  1. 1. Pricing and Marketing <ul><li>Dr. Anil Mishra </li></ul><ul><li>[email_address] </li></ul><ul><li>9937635059 </li></ul><ul><li>Asian School of Business Management </li></ul>
  2. 2. Following factors have to keep in mind before adopting pricing strategy <ul><li>Demand of the product in the market </li></ul><ul><li>Customers’ perception </li></ul><ul><li>How much margin is adequate to sustain in the market </li></ul><ul><li>Image of the company in the market </li></ul><ul><li>Expenditure incurred for producing goods </li></ul><ul><li>Competition. </li></ul>
  3. 3. Price and non price competition <ul><li>In price competition marketer who can sell his products at the lowest cost will usually win a larger part of the market share. </li></ul><ul><li>Non price competition ensures when marketers focus on factors other than the price, such as product features, quality of the product, packaging, promotion and so on. </li></ul>
  4. 4. Process of Price setting <ul><li>Setting price objectives </li></ul><ul><li>Factors affecting demand determination </li></ul><ul><li>Analyzing the pricing of the competitors </li></ul><ul><li>Selection of a pricing method </li></ul><ul><li>The selection of pricing policy </li></ul>
  5. 5. Setting pricing objective <ul><li>Survival </li></ul><ul><li>Profit </li></ul><ul><li>Return on investment </li></ul><ul><li>Market share </li></ul><ul><li>Status quo </li></ul><ul><li>Product quality </li></ul>
  6. 6. Factors affecting demand determination <ul><li>Price sensitivity </li></ul><ul><li>Demand curve </li></ul><ul><li>Price elasticity of demand </li></ul>
  7. 7. Customer are less price sensitive when <ul><li>Product is new and innovative </li></ul><ul><li>When lack of knowledge about substitutes available </li></ul><ul><li>When it is difficult for them to compare the product </li></ul><ul><li>When expenditure on product is very little </li></ul><ul><li>When the cost incurred on the product is too little compared to the total cost of the end product </li></ul><ul><li>When partly cost is borne by another party </li></ul><ul><li>When the products are purchased as an extension of products that were purchased in the past </li></ul><ul><li>When the product is considered to be high quality </li></ul><ul><li>Product cannot store. </li></ul>
  8. 8. Analyzing Competitors’ Pricing <ul><li>The demand for a product in the market is influenced by the pricing strategies of the competitors. </li></ul><ul><li>The pricing policies of a company might attract a new competitor into the market or may force the existing competitors to leave the industry. </li></ul><ul><li>Competitors may react in three ways: </li></ul><ul><li>To maintain status quo i.e. not react to price changes. </li></ul><ul><li>To set equal to that of the company </li></ul><ul><li>To attack the price changes by setting their prices lower that that of the company </li></ul>
  9. 9. Selection of pricing method <ul><li>Mark up pricing: </li></ul><ul><li>Target return pricing:unit cost + (desired cost* invested capital)/ unit sales </li></ul><ul><li>Going rate pricing: </li></ul><ul><li>Perceived value pricing: </li></ul><ul><li>Sealed bid </li></ul><ul><li>Differentiated pricing </li></ul><ul><li>Value pricing </li></ul><ul><li>Market skimming: </li></ul>
  10. 10. Selection of pricing policy <ul><li>Psychological pricing </li></ul><ul><li>Influence of other marketing mix variables </li></ul><ul><li>Transfer pricing </li></ul><ul><li>Pricing impact on other parties </li></ul>
  11. 11. Effects of Price Changes <ul><li>Buyers Perception on the price changes: </li></ul><ul><li>They have to convince the buyers about the price changes it they want to retain their loyalty. </li></ul><ul><li>Customers are more sensitive to changes in prices of products, which they buy frequently. </li></ul><ul><li>They have to make sure about necessity of making price changes in the product. </li></ul><ul><li>Competitors reaction </li></ul>