Prof	
  Shivananda	
  R	
  Koteshwar	
  
Director,	
  The	
  Amaatra	
  Academy	
  
shivoo@pes.edu	
  /	
  Facebook:	
  sh...
  Factors	
  affecting	
  pricing	
  decision	
  
  Strategies	
  followed	
  by	
  companies	
  in	
  reality	
  
  Consider	
   the	
   psychology	
   of	
   prices	
   and	
   not	
   simply	
   the	
  
economics	
  
  Consumer	
  p...
Cost-plus
pricing
Price based on
both demand
and costs
Price set in
relation to
market alone
SELECT BASE PRICE DETECTION M...
Internal reasons – Marketing objective (survival, market share,
profit maximization, quality leadership), cost, etc
Extern...
Loss leader
Location Packaging Advertising Branding Service
Sponsorship - £25m-a-year
Tata, reliance, airtel, SBI, Infosys
Amazon
Goog...
Captive
Optional (Accessories)
By Product
Bundling
Penetration Skimming SkimmingPenetration
Move inventory, stimulate D, extend
product life
recover high R&D costs
Price Li...
  Pay	
  by	
  Use	
  has	
  picked	
  up	
  
  A	
  buyer	
  is	
  more	
  informed	
  (not	
  intelligent!)	
  
  Int...
Prof	
  Shivananda	
  R	
  Koteshwar	
  
Director,	
  The	
  Amaatra	
  Academy	
  
shivoo@pes.edu	
  /	
  Facebook:	
  sh...
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Pricing - Strategies

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Factors affecting pricing decision AND
Strategies followed by companies in reality

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Pricing - Strategies

  1. 1. Prof  Shivananda  R  Koteshwar   Director,  The  Amaatra  Academy   shivoo@pes.edu  /  Facebook:  shivoo.koteshwar   You don’t sell through price. You sell the price. For Mount Carmel College BBM Students, Sept 2013
  2. 2.   Factors  affecting  pricing  decision     Strategies  followed  by  companies  in  reality  
  3. 3.   Consider   the   psychology   of   prices   and   not   simply   the   economics     Consumer  perception  of  value  is  important     Customers   use   price   less   when   they   can   judge   quality   of   a   product.     Price  becomes  an  important  quality  signal  when  customers   can’t  judge  quality;  price  is  used  to  say  something  about  a   product.       Price  often  depends  on  circumstances  –  You  always  pay  more   to  fly  when  you  want  to  fly         Consumers  are  often  prepared  to  pay  more  if  they  expect  to   get  excellent  service     Adding  value  doesn’t  mean  dropping  price     Price  will  be  compared    -­‐  Other  price  offers,  Prices  previously   paid,   Going   rate,   Alternative   product   price,   Alternative   substitute  price  
  4. 4. Cost-plus pricing Price based on both demand and costs Price set in relation to market alone SELECT BASE PRICE DETECTION METHOD SELECT PRICING OBJECTIVE Profit Oriented Target return / Maximize Profit Sales Oriented Sales Volume / Market Share Status Quo Stabilize Price / Competition DESIGN APPROPRIATE STRATEGIES •  Price vs. nonprice competition •  Skimming vs. penetration •  Discounts and allowances •  Freight payments •  One price vs. flexible price •  Psychological pricing •  Leader pricing •  Everyday low vs. high-low pricing •  Resale price maintenance
  5. 5. Internal reasons – Marketing objective (survival, market share, profit maximization, quality leadership), cost, etc External reasons - Nature of the market, demand, Competition, Environmental factors (economy, resellers, government)
  6. 6. Loss leader
  7. 7. Location Packaging Advertising Branding Service Sponsorship - £25m-a-year Tata, reliance, airtel, SBI, Infosys Amazon Google Apple UPS Sony 5c 5s Vertical product variation Product Modifications Product mix
  8. 8. Captive Optional (Accessories) By Product Bundling
  9. 9. Penetration Skimming SkimmingPenetration Move inventory, stimulate D, extend product life recover high R&D costs Price Lining Psychological Promotional
  10. 10.   Pay  by  Use  has  picked  up     A  buyer  is  more  informed  (not  intelligent!)     Internet  has  changed  the  fundamentals    -­‐  Has   benefited  both  buyer  and  seller     Buyer:  Price  comparisons,  Offers,  Discounts,   Shared  Coupons,  Smart  Borrow  etc     Seller:  Larger  Buyer  base,  Smart  supply  chain   management,  Better  Value  maximization  and   Appropriation  possible,  Can  take  advantage  of   the  SEOs    &  Targeted  Advertisements  etc  
  11. 11. Prof  Shivananda  R  Koteshwar   Director,  The  Amaatra  Academy   shivoo@pes.edu  /  Facebook:  shivoo.koteshwar   BLOG:  http://shivookoteshwar.wordpress.com   SLIDESHARE:  www.slideshare.net/shivoo.koteshwar  

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