Pricing Research

Unit 4 Chapter 2 Anish Abraham Asstt. Prof. RCET, Bhilai

How companies Price??

Small companies : Boss Industry standards Big companies Brand managers/Product managers Industry standards For some

Some examples of Power Pricers

BMW/Mercedes/ Aston Martin/Bentley Citizen/Omega/Rolex Red Bull/Monster Energy Drink Apple

Research and Pricing

Usefulness of research depends Companys objective Accordingly Pricing strategy

Objective and strategy

Survival Maximize Market share Maximize Profit Company growth To make product visible
Penetration Skimming Premium Pricing Psychological Discrimination Predatory Price Leadership

To beat the competitor Loss Leader

Pricing strategy Understanding of two elements: Competitors Customers Understanding Pricing research

Important issues pricing research

What, how, how many times 1. Price sensitivity Of your own brand Compaq 20,000 15,000 Compaq 20,000 Samsung Laptops 25,000-20,000 Price Sensitivity About other brands

2. Approach of the research

Ask the respondents?? Direct approach Focus group, depth interviews etc Topic price sensitive pride, esteem and status ??validity?? Indirect approach

3. How many times ask??

One time and one price change. (crosssectional) Price sensitive & not Price Sensitivity Range Highest value & lowest value accepted by customers

Pricing research - methods

1. Price sensitivity towards one product Price level sensitivity Two question Five question method Magnitude scaling

Normal Preferential

2. Price sensitivity towards other products Price difference sensitivity

Price Level sensitivity

1.

Two question method

Each respondents are asked two questions Minimum price pay? Maximum Price pay??

Five question method

1. 2. 3. 4. 5.

Lowest Price Low Price Generally acceptable Price High Price Highest Price

Consideration Quality

Five question method

Product is 25HD TV 1. Price? cheap Quality doubtable Will not purchase it!!! Consumer would say Rs 6,000 2. Price cheap Quality undoubtable

3. Price ? expensive Will buy Hi-Quality/luxury product Consumer would say Rs 25,000 4. Price ? expensive Will not buy Regardless of its quality

5. price ? generally acceptable by mass Consumer here would say Rs 12,00018,000 Consumer Durable (Elex.) can set price Various strategy needed Survival

Rs 6,000 -10,000 E.g. Crown & Aiwa

Market Penetration

Market sustainability 12,000-18,000 e.g. LG & Samsung Market Skimming or Premium Rs 20,000-25,000 E.g. Sony, Panasonic and Thompson

Magnitude scaling for Price Level Sensitivity

Various Price tags product respondents Each Tag two cues Acceptable and Unacceptable Respondents judgment each price

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Preferential Magnitude scaling Similar to normal magnitude scaling

Instead of two three cues Third cue indifference Customers are not bothered price tag Premium pricing and Lowest Pricing

5 1 5 1 0 0 0 0 9 3 9 3 0 0 0 0

U A i u a n c d a c i c e f c p e f p t e p . t r t e

P.M.S

Price difference sensitivity

Two methods

Sequential threshold Two brands Multiple brands

Thank you