1. Brand Value Chain
• BVC is a structured approach to assess the
sources and outcomes of brand equity and
the manner by which marketing activities
create brand value.
November 4, 2014 Sanjay Patro 1

2. Brand Value Chain
Value stages
Marketing
Program
Investment
Customer
Mindset
Market
Performance
Shareholder
Value
Product
Communicn
Trade
Employee.
Awareness
Associations
Attitudes
Attachment
Price Premium
Price Elasticity
Cost savings
Market share
Expansion
Success
Stock Price
P/E Ratio
Market
Capitalization
November 4, 2014 Sanjay Patro 2

3. Brand Value Chain
Marketing
Program
Investment
Customer
Mindset
Market
Performance
Shareholder
Value
Product
Communicn
Trade
Employee.
Awareness
Associations
Attitudes
Attachment
Activity
Price Premium
Price Elasticity
Cost savings
Market share
Expansion Success
Stock Price
P/E Ratio
Market
Capitalization
Multiplier Program
Quality
Market
Conditions
Investor
Sentiment
November 4, 2014 Sanjay Patro 3

4. Customer-Based Brand Equity Model
Consumer-
Brand
Resonance
Consumer
Judgments
Consumer
Feelings
Brand
Performance
Brand
Imagery
Brand Salience
INTENSE, ACTIVE
INTENSE, ACTIVE
LOYALTY
LOYALTY
RATIONAL &
EMOTIONAL
REACTIONS
RATIONAL &
EMOTIONAL
REACTIONS
POINTS-OF-PARITY
POINTS-OF-PARITY
&
&
POINTS-OF-DIFFERENCE
POINTS-OF-DIFFERENCE
DEEP, BROAD
DEEP, BROAD
BRAND
BRAND
November 4, 2014 Sanjay Patro AWARENESS
4
AWARENESS

5. Pricing Strategies
Dr.Sanjay Patro

6. 1. Pricing Builds or destroys value faster
than almost any business action?
2. Most Profitable firms are not
necessarily cheapest producers
3. The Other 3 Ps
4. Revenue directly linked to Price

7. Empirical Studies show that :
1. 1% improvement in price brings an 11.1% improvement in
operating profit.
2. 1% improvement in variable costs only brings a 7.8%
improvement in operating profit.
3. 1% improvement in volume sales brings a 3.3% improvement
in operating profit.
4. 1% improvement in fixed costs brings only a 2.3%
improvement in operating profits (Marn and Rosiello 1992).

8. Selecting the Pricing Objective
1. Profit Oriented
• Cost Plus Pricing
• To achieve target return
• To maximize profit
1. Sales Oriented
2. Status Quo Pricing
3. Price Quality leadership

10. How would you Price New Offerings

11. Pricing for New Products
1. Skimming Pricing Strategy
Conditions for Effective Skim Pricing
 When demand is likely to be inelastic
 Where there are high barriers to entry
 Where few economies of scale or
experience
 PLC is expected to be short

12. Case of a Firm that has gone
for Skimming Pricing ???

14. Zune (Microsoft)
First released in November 2006, the Zune was Microsoft’s “me too” answer to the iPod. While
it had some nifty product features that the iPod lacked (like sharing music from player to
player), the Zune, despite an expensive marketing effort by Microsoft, never really caught on.

15. Penetration Pricing Strategy
 Conditions for Effective Penetration Pricing
 Price Elasticity of Demand
 Where there is a strong threat of
competition
 Strong experience curve effects
 Low barriers to entry
 -----------------------
 Chota Coke and Chota Pepsi
 Rs. 1/- Video Downloads

16. Pricing for New Products

17. Can a company follow skimming
and penetration pricing strategy
simultaneously in its product
line ?

19. We need to find out what
percentage of customers are
price sensitive?

20. Assessing Price Sensitivity
 Taste
 Importance of Performance
 Ability to pay
 Intensity of Usage
 Category Knowledge

21. Internal Factors to the Firm
 Firm’s Objective
 Costs
 Marketing Program

22. External or Uncontrollable
Factors to Firm
 Consumer Price Responsiveness
 Competition and Competitive environment
 Legal and Environmental Factors
 Suppliers
 Retailers and Channel Members

23.  The Real Price of Everything..is the
toil and trouble of acquiring it.

24. Discriminatory Pricing
1. Product Form Discrimination
2. Customer Segment Pricing( for diff groups)
1. Products
2. Services
3. Place Discrimination

25. 4. Time Discrimination
 Yield management
5.Channel Discrimination
6.Image Discrimination

26. Do you think payment plans
will impact product/service
usage ?

27.  Higher consumption means higher
sales
 Get people to consume products that
they have purchased?
 Shelfware?

28. Consumers Perceptions of Price
 Brands are categorized under
different Price Bands
 Case of Samsung and LG ,Voltas
 Lakme Cosmetics –In India

30.  Birth of a New Category
 Case of Mobile Phones
Fast Moving Consumer Durables

31. Pricing of Current Products
1. Product-line Pricing
2. Optional Feature Pricing
3. Captive Product Pricing

33. 4. Two Part Pricing
5. By product Pricing
6. Target Pricing
7. Price Bundling
8. Price Unbundling

34. Bumpy Performance Curves

35.  You are planning to launch a 100% Fruit
Juice for upper middle class segment . At
what price should you launch it ?

36. Ask 4 simple questions:
• At what price it is too cheap?
• At what price it is a good value/bargain?
• At what price it is getting expensive?
• At what price is too expensive?
Van Westendorp Price Sensitivity Meter:

38. India : A highly price conscious market.
What happened to Nano?

40. Price-Quality Strategies
Premium High Value Superb Value
Overcharging Medium Value
Rip-Off False Economy
Good Value
Economy
PRICE
QUALITY
H M L
H
M
L

41. Volume
• What is the largest brand of Biscuits in the
world in volume?
Sanjay Patro

43. All consumers are different …………and
are willing to pay different prices

44. Creating Value Innovation in SUV Market

45. Price to Capture Value

46. Price may not have much to do
with costs !
 Take the case of the smartphones
and their covers/cases

47. Psychological Pricing
 Neumerical pricing ( Left to Right)
 Payment Plans –Annual vs. Quarterly
vs. Monthly
 Pricing -- Consumption Sales

49.  Payment Options Cash / Card
 Timing of Membership Drives of Clubs
/Gyms
 Higher consumption means ,higher
sales
 Shelfware?

51.  A firm has to maximise revenue-should
it bother about consumption?
 Immediacy of payment –critical for
consumption?
 Image Pricing

52. From Category Sensitivity to
Brand ………..
 Price Sensitivity Vs. Brand Sensitivity
 Brand Elasticity
 Brand Equity and Brand Elasticity

53. Initiating and Responding to Price
Changes
Reactions to Price Changes
Customer Reactions
Competitor Reactions

54. Responding to Competitors’ Price
Changes
Maintain price
Maintain price and add value
Reduce price
Increase price and improve quality
Launch a low-price fighter line

56. Price Points Must be Right
 SKUs must be rightly priced
 Rs. 2,5 0r Rs.10/-
 50% Of Cadbury’s turnover comes Rs 5/-
or less SKUs
 60% of shampoo sales comes from
sachets

57. Price Adaptation
 Geographical discrimination
 Uniform delivered pricing(Postage Stamp P)
 Zone delivered pricing
 FOB Pricing

58.  Price discounts and allowances
 Cash Discount
 Quantity discount
 Functional discount
 Seasonal discounts

59. Pricing of Digital Products

60.  Pre booking Price
 Impact of announcement of New
Product on sales of current variant

61.  On-line Bidding
 Reverse Pricing
 What was Economist’s Predcition
about online purchases?
 Auction through ebay or yahoo?

62.  Conduct periodic pricing experiments.
 Price Experimentation
 In price comparison sites, when
number of competitors double, what
happens to price elasticity?

63. Online travel sites?
 The study of online travel agents, for
instance, found that the lowest-priced
and the highest-priced sites were
owned by the same company.
 But the pricier one was easier to use,
allowing the parent company to
charge busy customers more.

64.  Any Industry ,only one lowest cost
competitor
 How much more the Top performing
Players in a given industry earn than
the ind-norm?