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Unit-5
Pricing
Presented By:
Dr. Arun Agarwal
Concept
• Basically, a price is the amount of money or anything that a buyer
gives to a seller in exchange for a good or a service.
• Price is only element in the marketing of a firm that generates revenue.
Meaning:
• Pricing refers to the process of determining what a company will
receive in exchange for its products or services.
• It's the monetary value assigned to goods or services based on
various factors, including production costs, market demand,
competition, and perceived value.
Importance of Pricing
• Revenue Generation: Pricing directly impacts a company's revenue. Effective pricing
strategies can maximize profits by capturing the maximum value from customers.
• Competitive Advantage: Pricing can be a powerful tool for gaining a competitive edge
in the market. Offering competitive prices or positioning as a premium brand can attract
customers.
• Brand Image: The price of a product or service often reflects its perceived quality and
value. Strategic pricing can enhance brand perception and attract the target market.
• Market Share: Pricing influences market share by affecting demand. Flexible pricing
strategies can help businesses penetrate new markets or defend existing ones.
Objective of Pricing
• Profit Maximization: One of the primary objectives of pricing is to maximize
profits by setting prices that cover costs and generate surplus revenue.
• Market Share Growth: Some businesses aim to increase market share by
offering competitive prices to attract more customers.
• Revenue Growth: Pricing strategies can focus on increasing overall revenue by
encouraging higher sales volumes or selling premium-priced products/services.
• Customer Satisfaction: Setting fair prices that align with customer expectations
can lead to increased customer satisfaction and loyalty.
Determination of Pricing
• Costs: Production, distribution, and marketing costs must be covered to ensure
profitability.
• Demand: Understanding customer demand and price elasticity helps in setting prices that
maximize revenue.
• Competition: Competitive pricing analysis ensures that prices are in line with industry
standards and avoid losing customers to competitors.
• Perceived Value: Customers' perception of a product's value relative to its price plays a
crucial role in pricing decisions.
• Market Conditions: Economic conditions, inflation rates, and market trends influence
pricing strategies.
Pricing Methods and Strategies:
• Cost-Based Pricing
• Demand Based Pricing
• Competition Based Pricing
• Other Pricing methods:
• Value Pricing
• Going rate pricing
• Transfer pricing

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Pharmaceutical Marketting: Unit-5, Pricing

  • 2. Concept • Basically, a price is the amount of money or anything that a buyer gives to a seller in exchange for a good or a service. • Price is only element in the marketing of a firm that generates revenue. Meaning: • Pricing refers to the process of determining what a company will receive in exchange for its products or services. • It's the monetary value assigned to goods or services based on various factors, including production costs, market demand, competition, and perceived value.
  • 3. Importance of Pricing • Revenue Generation: Pricing directly impacts a company's revenue. Effective pricing strategies can maximize profits by capturing the maximum value from customers. • Competitive Advantage: Pricing can be a powerful tool for gaining a competitive edge in the market. Offering competitive prices or positioning as a premium brand can attract customers. • Brand Image: The price of a product or service often reflects its perceived quality and value. Strategic pricing can enhance brand perception and attract the target market. • Market Share: Pricing influences market share by affecting demand. Flexible pricing strategies can help businesses penetrate new markets or defend existing ones.
  • 4. Objective of Pricing • Profit Maximization: One of the primary objectives of pricing is to maximize profits by setting prices that cover costs and generate surplus revenue. • Market Share Growth: Some businesses aim to increase market share by offering competitive prices to attract more customers. • Revenue Growth: Pricing strategies can focus on increasing overall revenue by encouraging higher sales volumes or selling premium-priced products/services. • Customer Satisfaction: Setting fair prices that align with customer expectations can lead to increased customer satisfaction and loyalty.
  • 5. Determination of Pricing • Costs: Production, distribution, and marketing costs must be covered to ensure profitability. • Demand: Understanding customer demand and price elasticity helps in setting prices that maximize revenue. • Competition: Competitive pricing analysis ensures that prices are in line with industry standards and avoid losing customers to competitors. • Perceived Value: Customers' perception of a product's value relative to its price plays a crucial role in pricing decisions. • Market Conditions: Economic conditions, inflation rates, and market trends influence pricing strategies.
  • 6. Pricing Methods and Strategies: • Cost-Based Pricing • Demand Based Pricing • Competition Based Pricing • Other Pricing methods: • Value Pricing • Going rate pricing • Transfer pricing