3 devlp price

INDO GERMAN TRAINING CENTREINDO GERMAN TRAINING CENTRE
Prof. MAHAJAN SAMANTProf. MAHAJAN SAMANT
……developingdeveloping PRICEPRICE

Only PriceOnly Price
Topmost
Lowest

9 Price – Quality Strategies9 Price – Quality Strategies
HIGH MEDIUM LOW
HIGHMEDIUMLOW
PRICE
Q
U
A
L
I
T
Y
Premium
High
Value
Super
Value
Over
Charging
Medium
Value
Good
Value
Rip - Off False
Economy
Economy

Strategies & Programs. . .Strategies & Programs. . .
• Setting Price Strategy
1
Selecting
Price
Objective
2
Determining
Demand
3
Estimating
Costs
4
Analyzing
Competitors’
Costs, Prices
& Offers
5
Selecting a
Price Method
6
Selecting the
Final Price

1. Selecting Price Objective
1.1 Survival
1.2 Maximum Current Profit
1.3 Maximum Market Skimming
1.4 Product Quality Leadership

2. Determining Demand (Price Sensitivity)
A. Demand Curve
Specialist
Services
Doctors
p
q
Price
Quantity Demanded Per
Period
(a) Inelastic
Yarn (Rs.1/-
per Kg)
p
q
Quantity Demanded Per
Period
(b) Elastic
Price

B. Estimate Demand Curve
1. Analyze past prices, quantity sold & other factors.
(Tool is statistics & estimate relationships)
2. Price Experiments
(a) Bennett & Wilkinson (Vary price in discount store)
(b) Different Price in different territories (Usha Fans  CASA)
(c) Internet – e business (Every nth customer)
3. Ask Buyers  Purchase Intention at prices
(Marketing Research is the tool).

C. Price Elasticity
Mc Kinsey Standards
World Economy & Indicator

3. Estimating Costs
A. Production:- Total Cost=Fixed + Variable Cost
COST BEHAVIOUR
Quantity Produced Per
Period
(b) Diff. Size Plant
Cost per
unit
5
0
0
0
1
0
0
0
2
0
0
0
3
0
0
0
4
0
0
0
Quantity Produced Per
Period
(a) Fixed Size Plant
Cost per
unit
1000

3. Estimating Costs
Accumulated Production
Cost per
unit
Experience
Curve
Current Price
Experience Curve
SO PRICE – VOLUME STRATEGY

3. Estimating Costs
B. ACTIVITY
ABC  Activity Based Costing
Say Retailers Purchase Pattern is 1-2-3 or daily OR
per week.
Now there are various distribution channels for this.

3. Estimating Costs
C. TARGET COSTING
Cost = Price – Profit
(Japan)

4. Analyzing Competitors
Costs, Prices and Special
Offers

5. Selecting a Pricing Method
Variable Cost per unit = Rs.10
Fixed Cost = Rs.3,00,000
Expected unit sales = 50,000
Hence Unit Cost = Variable Cost + Fixed Cost
Unit Sales
= 10 + 3,00,000 = 10 + 6 = Rs.16.
50,000
(say) 20% Mark Up on sales is required
Hence Mark up Price = Unit Cost
1-Desired Return on Sales
= 16 = Rs. 20/-
1-0.2
5.1. MARK UP PRICING

Target Rate of R.O.I is determined.
(say) Investment = Rs.10,00,000
Desired x Invested
Target Return Price = Unit Cost + Return Capital
Unit Sales
= 16 + 0.30 X 10,00,000
50,000
= Rs. 22/-
5.2. TARGET RETURN PRICING

Look at Break Even Chart
Revenue
Total Cost
Sales Volume in Units
Value
(Rs.)
Fixed Cost
30,000
Break Even
Point
Break Even
Volume =
Fixed Cost
Price -
Var. Cost
Unit
3,00,000
20 – 10
=30,000

Made up of Several Elements
5.3. PERCEIVED VALUE PRICING

Low price for high quality
(strategy . . . . A few Customers)
EDLP  Every Day Low Price ( Offers)
5.4. VALUE PRICING

Based on competitors’ prices
‘Follow the leader’ is one theme
5.5. GOING RATE PRICING

Growth of Internet + Other factors.
5.6. AUCTION TYPE PRICING

Volume Booking + Group Formation
5.7. GROUP PRICING

5.8. CARTEL PRICING

6. Selecting the Final Price
Additional Factors
1. Psychological Pricing
2. Gain & Risk Sharing Pricing (Mutual Funds)
3. Influence of other Marking Mix Elements
4. Company Pricing Policies
Adapting the Price (Nett or SPS / APE Effects)

3 devlp price

Recommended

Recommended

More Related Content

Viewers also liked

Viewers also liked (14)

Similar to 3 devlp price

Similar to 3 devlp price (20)

3 devlp price