PRICING
IMPORTANCE OF PRICING
OBJECTIVES OF PRICING DECISIONS
FACTORS AFFECTING THE PRICE DETERMINATION
COSTS OF PRICING
NATURE OF THE MARKET AND DEMAND
IN THIS SUMMARY
The Price Advantage, written by Walter Baker, Michael Marn, and Craig Zawada, outlines how to initiate and maintain appropriate pricing in order to effectively increase profits. By taking advantage of minor price increases, a company can significantly increase its profits. The authors not only demonstrate how to accomplish successful pricing but also explain how to avoid common pricing mistakes, such as emotional price wars or missed opportunities in postmerger or lifecycle pricing. The marketplace rewards businesses with superior products and services. The price advantage creates pride within a company because its customers knowingly pay more for services and products they believe are superior and worth the cost. Taking responsibility for price management is essential in today’s market due to downward pressures on price levels. Otherwise, percentage points of price and opportunities for profit can slip away.
SUBSCRIBE TODAY
http://www.bizsum.com/summaries/price-advantage
This document reviews best practice in pricing processes to provide a reference against which current practices and proposals can be tested. Our objectives have been: to research the attributes of world-class pricing through publications and academic sources; to investigate how these attributes are applied in practice to products and services; to assess pricing processes in successful businesses.
In recent years a new attitude toward pricing has emerged. Deregulation and international free trade agreements have increased competition. Price promotion has eroded the power of brand loyalty. Pricing has assumed greater importance to most businesses.
As markets increasingly assume a global dimension, customers can more easily compare prices between one region or country and another, using the internet or a fax machine. They can often locate the same product, or an
acceptable substitute, from another source. Customers are more demanding and fickle, and their expectations increasingly difficult to fulfil.
Price inflation in western economies is now at its lowest for decades. Price increases are no longer accepted without protest from customers, if at all.
The Chairman of General Electric has predicted the onset of the ‘Value Decade’. Global price competition will strengthen because of: reduced product differentiation; global over-capacity for production; significantly diminished trade barriers; efficient information and distribution systems; providing customers with easy access to the prices of suppliers; a growing lack of customers’ loyalty to individual suppliers. Choice will be increasingly driven by price.
This is a challenging scenario that reinforces the need for an integrated strategy and concerted managerial action on pricing.
Pricing processes have lagged behind developments in the market place. They are often characterised by internal conflict between accountants wishing to maximise profit per unit and marketing specialists who seek to maximise
throughput. They are also affected by the potential for strained relations with good customers.
Some companies have downsized their operations to a level where diminishing returns cause them to question the benefits of continuing to focus upon reducing costs. As they switch their attention from cost cutting to adding
value, pricing naturally assumes increased weight in the marketing mix.
We have found many companies reluctant to discuss their own processes.
Some may wish to avoid betraying a lack of sophistication.
This short article aimes the entrepreneur and the decision maker in the SME environment in order to help them valued their new product or solution and then fix a selling price consequently
Sure, let's go through the main concepts of financial statements, their advantages and disadvantages, and provide examples and relevant ratio calculations.
Main Financial Statements
1. Income Statement
2. Balance Sheet
3. Cash Flow Statement
4. Statement of Changes in Equity
1. Income Statement
Concept:
• Shows the company's revenues, expenses, and profits or losses over a specific period.
• Key components include revenues, cost of goods sold (COGS), gross profit, operating expenses, operating income, interest, taxes, and net income.
Advantages:
• Provides a clear picture of profitability.
• Helps in assessing operational efficiency.
• Useful for trend analysis over different periods.
Disadvantages:
• Can be manipulated through accounting practices.
• Does not provide a complete financial health picture (e.g., cash flow).
Example:
Sure, let's go through the main concepts of financial statements, their advantages and disadvantages, and provide examples and relevant ratio calculations.
Main Financial Statements
1. Income Statement
2. Balance Sheet
3. Cash Flow Statement
4. Statement of Changes in Equity
1. Income Statement
Concept:
• Shows the company's revenues, expenses, and profits or losses over a specific period.
• Key components include revenues, cost of goods sold (COGS), gross profit, operating expenses, operating income, interest, taxes, and net income.
Advantages:
• Provides a clear picture of profitability.
• Helps in assessing operational efficiency.
• Useful for trend analysis over different periods.
Disadvantages:
• Can be manipulated through accounting practices.
• Does not provide a complete financial health picture (e.g., cash flow).
Example:
Sure, let's go through the main concepts of financial statements, their advantages and disadvantages, and provide examples and relevant ratio calculations.
Main Financial Statements
1. Income Statement
2. Balance Sheet
3. Cash Flow Statement
4. Statement of Changes in Equity
1. Income Statement
Concept:
• Shows the company's revenues, expenses, and profits or losses over a specific period.
• Key components include revenues, cost of goods sold (COGS), gross profit, operating expenses, operating income, interest, taxes, and net income.
Advantages:
• Provides a clear picture of profitability.
• Helps in assessing operational efficiency.
• Useful for trend analysis over different periods.
Disadvantages:
• Can be manipulated through accounting practices.
• Does not provide a complete financial health picture (e.g., cash flow).
Example:
Sure, let's go through the main concepts of financial statements, their advantages and disadvantages, and provide examples and relevant ratio calculations.
Main Financial Statements
1. Income Statement
2. Balance Sheet
3. Cash Flow Statement
4. Statement of Changes in Equity
1. Income Statement
Concept:
• Shows the company's revenues, expenses, and profits or losses over a specific period.
• Key components include revenues, cost of goods sold (COGS), gross profit, op
Loans and Advances
Principles of Good lending
Creditworthiness of borrowers
Securing advances
Lien
Pledge
Mortgage
Hypothecation
Documents of title to goods
Life Insurance Policy
Fixed Deposit Receipts
Mutual Funds
Government Securities
Gold Loans
Negotiable Instruments Act 1881
Significance of negotiable instruments
Features of negotiable instruments
Cheque Meaning
Types of Cheque
MICR – Meaning
Crossing
Crossing of Cheque
Holder in due course
Payment in due course
Endorsement
Paying Banker
Dishonour of Cheque
Statutory protection to a paying Banker
Material Alteration
Statutory protection in case of a Materially altered Cheque
Collecting Banker
Duties and Liabilities of Collecting Banker
Protection of Collection Banker
IN THIS SUMMARY
The Price Advantage, written by Walter Baker, Michael Marn, and Craig Zawada, outlines how to initiate and maintain appropriate pricing in order to effectively increase profits. By taking advantage of minor price increases, a company can significantly increase its profits. The authors not only demonstrate how to accomplish successful pricing but also explain how to avoid common pricing mistakes, such as emotional price wars or missed opportunities in postmerger or lifecycle pricing. The marketplace rewards businesses with superior products and services. The price advantage creates pride within a company because its customers knowingly pay more for services and products they believe are superior and worth the cost. Taking responsibility for price management is essential in today’s market due to downward pressures on price levels. Otherwise, percentage points of price and opportunities for profit can slip away.
SUBSCRIBE TODAY
http://www.bizsum.com/summaries/price-advantage
This document reviews best practice in pricing processes to provide a reference against which current practices and proposals can be tested. Our objectives have been: to research the attributes of world-class pricing through publications and academic sources; to investigate how these attributes are applied in practice to products and services; to assess pricing processes in successful businesses.
In recent years a new attitude toward pricing has emerged. Deregulation and international free trade agreements have increased competition. Price promotion has eroded the power of brand loyalty. Pricing has assumed greater importance to most businesses.
As markets increasingly assume a global dimension, customers can more easily compare prices between one region or country and another, using the internet or a fax machine. They can often locate the same product, or an
acceptable substitute, from another source. Customers are more demanding and fickle, and their expectations increasingly difficult to fulfil.
Price inflation in western economies is now at its lowest for decades. Price increases are no longer accepted without protest from customers, if at all.
The Chairman of General Electric has predicted the onset of the ‘Value Decade’. Global price competition will strengthen because of: reduced product differentiation; global over-capacity for production; significantly diminished trade barriers; efficient information and distribution systems; providing customers with easy access to the prices of suppliers; a growing lack of customers’ loyalty to individual suppliers. Choice will be increasingly driven by price.
This is a challenging scenario that reinforces the need for an integrated strategy and concerted managerial action on pricing.
Pricing processes have lagged behind developments in the market place. They are often characterised by internal conflict between accountants wishing to maximise profit per unit and marketing specialists who seek to maximise
throughput. They are also affected by the potential for strained relations with good customers.
Some companies have downsized their operations to a level where diminishing returns cause them to question the benefits of continuing to focus upon reducing costs. As they switch their attention from cost cutting to adding
value, pricing naturally assumes increased weight in the marketing mix.
We have found many companies reluctant to discuss their own processes.
Some may wish to avoid betraying a lack of sophistication.
This short article aimes the entrepreneur and the decision maker in the SME environment in order to help them valued their new product or solution and then fix a selling price consequently
Sure, let's go through the main concepts of financial statements, their advantages and disadvantages, and provide examples and relevant ratio calculations.
Main Financial Statements
1. Income Statement
2. Balance Sheet
3. Cash Flow Statement
4. Statement of Changes in Equity
1. Income Statement
Concept:
• Shows the company's revenues, expenses, and profits or losses over a specific period.
• Key components include revenues, cost of goods sold (COGS), gross profit, operating expenses, operating income, interest, taxes, and net income.
Advantages:
• Provides a clear picture of profitability.
• Helps in assessing operational efficiency.
• Useful for trend analysis over different periods.
Disadvantages:
• Can be manipulated through accounting practices.
• Does not provide a complete financial health picture (e.g., cash flow).
Example:
Sure, let's go through the main concepts of financial statements, their advantages and disadvantages, and provide examples and relevant ratio calculations.
Main Financial Statements
1. Income Statement
2. Balance Sheet
3. Cash Flow Statement
4. Statement of Changes in Equity
1. Income Statement
Concept:
• Shows the company's revenues, expenses, and profits or losses over a specific period.
• Key components include revenues, cost of goods sold (COGS), gross profit, operating expenses, operating income, interest, taxes, and net income.
Advantages:
• Provides a clear picture of profitability.
• Helps in assessing operational efficiency.
• Useful for trend analysis over different periods.
Disadvantages:
• Can be manipulated through accounting practices.
• Does not provide a complete financial health picture (e.g., cash flow).
Example:
Sure, let's go through the main concepts of financial statements, their advantages and disadvantages, and provide examples and relevant ratio calculations.
Main Financial Statements
1. Income Statement
2. Balance Sheet
3. Cash Flow Statement
4. Statement of Changes in Equity
1. Income Statement
Concept:
• Shows the company's revenues, expenses, and profits or losses over a specific period.
• Key components include revenues, cost of goods sold (COGS), gross profit, operating expenses, operating income, interest, taxes, and net income.
Advantages:
• Provides a clear picture of profitability.
• Helps in assessing operational efficiency.
• Useful for trend analysis over different periods.
Disadvantages:
• Can be manipulated through accounting practices.
• Does not provide a complete financial health picture (e.g., cash flow).
Example:
Sure, let's go through the main concepts of financial statements, their advantages and disadvantages, and provide examples and relevant ratio calculations.
Main Financial Statements
1. Income Statement
2. Balance Sheet
3. Cash Flow Statement
4. Statement of Changes in Equity
1. Income Statement
Concept:
• Shows the company's revenues, expenses, and profits or losses over a specific period.
• Key components include revenues, cost of goods sold (COGS), gross profit, op
Loans and Advances
Principles of Good lending
Creditworthiness of borrowers
Securing advances
Lien
Pledge
Mortgage
Hypothecation
Documents of title to goods
Life Insurance Policy
Fixed Deposit Receipts
Mutual Funds
Government Securities
Gold Loans
Negotiable Instruments Act 1881
Significance of negotiable instruments
Features of negotiable instruments
Cheque Meaning
Types of Cheque
MICR – Meaning
Crossing
Crossing of Cheque
Holder in due course
Payment in due course
Endorsement
Paying Banker
Dishonour of Cheque
Statutory protection to a paying Banker
Material Alteration
Statutory protection in case of a Materially altered Cheque
Collecting Banker
Duties and Liabilities of Collecting Banker
Protection of Collection Banker
RELATIONSHIP BETWEEN BANKER AND CUSTOMER -
GENERAL AND SPECIAL RELATIONSHIP -
SPECIAL TYPES OF CUSTOMERS - CLASSIFICATION AND NATURE - DEPOSIT ACCOUNT -
SAVING BANK DEPOSIT ACCOUNT -
CURRENT DEPOSIT ACCOUNT - FIXED DEPOSIT ACCOUNT - RECURRING DEPOST ACCOUNT - OPENING AND CLOSING OF A BANK ACCOUNT - Different Forms Used in Banks - PROS AND CONS OF MULTIPLE BANK ACCOUNTS - PASS BOOK - COMMON MISTAKES THAT OCCUR IN THE PASS BOOK
BANKING - INTRODUCTION - ORIGIN AND DEVELOPMENT OF BANKS - Meaning of Bank - FEATURES OF BANKING - LICENSING OF BANKS - IMPORTANCE OF BANKING - FUNCTIONS OF BANKS - COMMERCIAL BANKS - TYPE OF BANKING ON THE BASIS OF THEIR FUNCTION - CLASSIFICATION OF BANKS OR BANKING SYSTEMS AND STRUCTURE - FUNCTIONS OF COMMERCIAL BANKS - CENTRAL BANKING - DIFFERENT BETWEEN CENTRAL BANKING AND COMMERCIAL BANKING - RESERVE BANK OF INDIA - ORIGIN - MONETARY POLICY -MEANING - ONLINE BANKING
Meaning and Definition – Management
Nature of Management
Management – Art or Science
Importance of Management
Functions of Management
Advantages of Management
Disadvantages of Management
Process of Management
Fayol’s 14 Principles of Management
Management Thoughts
F.W. Taylor
Peter F. Drucker
Business – Meaning, Nature, Scope
Objectives of Business
Essentials of a successful business
Business Environment
Internal Factors
External Factors
Emerging opportunities in business
E-Commerce
Introduction to Business Organization
Forms of Business Organization
National Business
International Business
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1. SRM INSTITUTE OF SCIENCE AND
TECHNOLOGY
DEPARTMENT OF COMMERCE
CLASS : I BCOM CS
COURSE CODE : UCC20S02T
COURSE NAME : MARKETING
2. “Price is the exchange value of goods and service in terms of
money”. Setting the right price is an important part of
effective marketing. It is the only part of the marketing mix
that generate revenue (product, promotion, and place are all
about marketing costs).Price is also the marketing variable
that can be changed most quickly, perhaps in response to a
competitor price change.
Put simply, Price is the amount of money or goods for
which a thing is bought or sold. The price of a product
may be seen at a financial expression of the value of that
product.
For a consumer, price is the monetary expression of the
value to be enjoyed/ benefits of purchasing product, as
compared with other available items.
3. Without price there is no marketing, in the society, It
money is not there, exchange of goods can be undertaken,
but without price. That is there is no exchange value of a
product or service agreed upon in a market transaction is
the key factors which affect the sales operations.
Price is important economic regulator.
Can decide the success or failure of a firm.
The marketing demand for a product or service to a large
extent depends upon the price of the product.
Price will affect the competitive position and share of the
market.
Price is always an important consideration both to the
buyer and seller.
4. To maximize the profits
Price Stability
Competitive situation
Achieving a Target-return
Ability to pay
Long-run Welfare of the firm
7. Cost price is the total amount of money that it costs a
manufacturer to produce a given product or provide a
given service.
A cost price includes all outlays that are required for
production, including property costs, materials, power,
research and development, testing, worker wages and
anything else that must be paid for. The manufacturer must
calculate a product’s cost price carefully to avoid taking a
loss on sales or not being profitable enough. Scrupulous
accounting and careful deliberations are required to set
subsequent prices realistically. A sum for contingency may
also be included in the cost price, given the difficulty of
ensuring that all costs are accounted for.
8. Cost price, along with the profit margin, determines a
product’s wholesale price. Between the manufacturer’s
suggested retail price (MSRP) and the wholesale price,
there is generally room for profit for
both distributors and retailers. However, manufacturers
occasionally offer a product at cost or even below cost
– forgoing their profit – as a special incentive or a
means of dealing with unforeseen circumstances, such
as unfavorable market environments.
Cost price is often considered sensitive information that
the manufacturer wants to protect from both customers
and competitors.
9. NATURE OF THE MARKET AND DEMAND
Market demand is the total amount of goods and
services that all consumers are willing and able to
purchase at a specific price in a marketplace. In
other words, it represents how much consumers can
and will buy from suppliers at a given price level in a
market.
10. COMPETITION
Competition is the rivalry between companies selling similar
products and services with the goal of achieving revenue,
profit, and market share growth. Market competition
motivates companies to increase sales volume by utilizing
the four components of the marketing mix, also referred to
as the four P's. These P's stand for product, place,
promotion, and price. Knowing and understanding your
competition is a critical step in designing a successful
marketing strategy. If you are not aware of who the
competition is and knowledgeable about their strengths and
weaknesses, it's likely that another firm could enter the
picture and provide a competitive advantage, such as
product offerings at lower prices or value added benefits.
Identifying your competition and staying informed about
their products and services is the key to remaining
competitive in the market and is crucial to the survival of
any business.
11.
12. Willingness to pay or WTP is the maximum amount of
money a consumer is inclined or willing to spend on a
commodity. This amount can never be expressed in
exact numbers as all the consumers will never have the
same willingness to pay.
In other words, the willingness to pay keeps on
fluctuating depending on certain factors. So, it is
generally measured as a range. Willingness to pay gives
an idea of the aggregate demand for a particular period.
13. Willingness to accept is the minimum
amount at which sellers sell their
commodity. Contrary to this, the
Willingness to Pay is the maximum price
consumers would pay to buy the item.
14. What makes your product or service
different and more appealing to customers
than other options in your category. Product
differentiation is what gives you a
competitive advantage in your market.
Product differentiators can include better
quality and service as well as unique
features and benefits.
15. Management of the 4-P’s of marketing (marketing mix)
is the mandate of a marketing manager in firm. A
marketing manager therefore analyzes the market, plans
for the future, develops marketing strategies, and meets
market needs and desires. The marketing plan identifies
all controllable elements of the exchange relationship
between an organization and its customers. The 4-Ps are
considered controllable since they represent the key
inputs into a marketing manager’s plan. Such inputs may
entail budgetary allocation, human and physical
resources.
16. Regardless of the pricing strategy a company ultimately
selects, it is important to do a break-even analysis
beforehand. Marketers need to understand break-even
analysis because it helps them choose the best pricing
strategy and make smart decisions about the short- and
long-term profitability of the product.
The break-even price is the price that will produce enough
revenue to cover all costs at a given level of production. At
the break-even point, there is neither profit nor loss. A
company may choose to price its product below the break-
even point, but we’ll discuss the different pricing strategies
that might favor this option later in the module.
Formula in rupees: Break-Even Price = Costs / Units
In units : Break-Even Quantity (in terms of units) =
Costs / Price
17. Cost-plus pricing, also called markup pricing, is the practice by a
company of determining the cost of the product to the company and
then adding a percentage on top of that price to determine the selling
price to the customer.
Cost-plus pricing is a very simple cost-based pricing strategy for
setting the prices of goods and services. With cost-plus pricing you
first add the direct material cost, the direct labor cost,
and overhead to determine what it costs the company to offer the
product or service. A markup percentage is added to the total cost
to determine the selling price. This markup percentage is profit.
Thus, you need to start out with a solid and accurate understanding
of all the business' costs and where those costs are coming from.
In certain cases, the markup percentage is agreed upon by both
buyer and seller. This percentage can also serve as a bargaining chip
during the sale.