This document discusses pricing strategies and objectives. It outlines the key considerations in setting price, including determining demand, estimating costs, analyzing competitors, and selecting a pricing method. The document notes that companies must first decide on a pricing objective like maximizing profits or market share. It also discusses factors that influence demand elasticity like availability of substitutes. Finally, the document lists several common pricing methods like markup pricing, target-return pricing, and perceived-value pricing that companies can use to determine the final price.

1. Presented by :
Manish Mahajan
20-MBA-13

2. Price is defined as the amount of money
which is charged by a Seller from a
Buyer
for a product or for certain service.
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3. A company must set its price in relation to
the value delivered and perceived by the
customer.
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4. 4

5. 5

6. quality
Super value
High value
Premium
Good value
Medium value
Overcharging
Economy
False economy
Rip off
Price
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7. I.
Selecting the pricing objective
II.
Determining demand
III. Estimating
costs
IV.
Analyzing competitors
V.
Selecting a pricing method
VI.
Selecting the final price
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8. The company first decides where it wants to
position its market offering. The objective
could be : Survival
 Maximize
current profit
 Maximize
market share
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9. Each price will lead to a different level of
demand and have a different impact on a
company’s marketing objectives.
Demand and price are inversely related i.e.
Higher the price, lower the demand
So, Company needs to consider : Price sensitivity
 Price elasticity of demand
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10. The degree to which
the
price
of
a
product
affects
consumers
purchasing
behaviors.
The degree of price
sensitivity
varies
from
product
to
product and from
consumer
to
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11.  Shared
cost (part of cost is borne by other party )
 Inventory
effect ( buyers can not store the product
)
 Substitute
 Difficult
 End
awareness by buyers
comparison by buyers
benefit ( expenditure small part of total
income )
 Total
expenditure ( purchase cost is insignificant
compared to the cost of end product )
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12.  This
determines the changes in demand
with unit change in price
 If
there is little or no change in demand, it
is said to be price inelastic.
 If
there is significant change in demand,
then it is said to be price elastic.
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13.  There
are few or no substitutes
 Buyers
readily do not notice the higher
price
 Buyers
are slow to change their buying
habits
 Buyers
think that the higher prices are
justified
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14.  Demand
sets a price the company charge
for its product and Cost sets the floor as
company wants to set a price that cover
there costs also.
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15.  Fixed
costs-doesn’t vary with production.
 Variable
 Total
costs-varies directly
costs: FC+VC
 Average
cost-TC/production
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16.  Marketers
are generally in a better position
to establish prices when they know the
competition’s
prices;
discovering
competitors’ prices may be a regular
function of marketing research.
 Marketers
in an industry in which price
competition prevails need competitive price
information to ensure their organization’s
prices are the same, or lower than, their
competitors’ prices.
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17.  An
organization may set its prices slightly
above the competition to give its products
an exclusive image, or it may use price as a
competitive tool and price its products
below those of competitors.
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18.  The
three major dimensions on which prices
can be based are cost, demand, and
competition.
 An organization usually considers multiple
dimensions. The selection of the bases to be
used is affected by the type of product, the
market structure of the industry, the
brand’s market share position relative to
competing
brands,
and
customer
characteristics.
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19.  Markup
pricing
 Target-return
pricing
 Perceived-value
 Going-rate
pricing
pricing
 Auction-type
pricing
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20.  Markup is
the
difference
between
the cost of a good or service and its selling
price
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21.  Target
return is calculated as the money
invested in a venture plus the profit that
the investor wants to see in return,
adjusted for the time value of money. As a
return on investment method, target return
pricing requires an investor to work
backwards to reach a current price.
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22.  The valuation of
good or service according
to
how
much consumers are
willing
to pay for it, rather than upon its
production
and
delivery
costs.
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23.  Setting
a price for a product or service
using the reveling market price as a basis.
Going
rate
pricing
is
common
practice with homogeneous products with
very little variation from one producer to
another does.
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24. English auctions
Dutch auctions
Sealed-bid auctions
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25.  Pricing
methods narrow the range from
which the company must select its final
price. In selecting that price, the company
must consider additional factors , inclosing
the impact of the other activities , company
pricing policies, gain and risk sharing
pricing , and the impact of price in other
parties
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26.  Kotler
Philip, Marketing Management ,
Pearson , 14e,pp 349-63
 http://www.csustan.edu/market/williams/3410
 http://en.wikipedia.org/wiki/Pricing
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