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PRICING

PRICING OF A PRODUCT : The amount of money charged for a product or service, or the sum of the values that customers exchange for the benefits of having or using the product or service is pricing. Pricing conveys the positioning of the product, it has direct relationship to revenue and is responsible for the market share. PRICING OBJECTIVE OF COLOR STUDIO : They do the value based pricing. Value based pricing uses buyers perceptions of value, not the sellers cost, as the key to pricing.

PRICING STRATEGY : Pricing strategies usually changes as the product passes through its life cycle. The introductory stage is especially challenging. Companies bringing out a new product face the challenge of setting prices for the first time. They can choose between the two broad strategies : (i) market-skimming pricing (ii) market penetration pricing PRICING STRATEGY AT COLOR STUDIO : Color studio mainly caters to middle class and upper-middle class, therefore, they follow the competition based pricing strategies. Their pricing practices are based on Value Based Pricing. Pricing at color studio falls under the category of Market-penetration pricing. MARKET-PENETRATION PRICING AT COLOR STUDIO Market-penetration is defined as setting a low price for a new product in order to attract a large number of buyers and a large market share. Color studio has set a low initial price in order to penetrate the market quickly and deeply, and to attract a large number of buyers quickly and win a large market share.

PRICE ADJUSTMENT STRATEGIES Companies usually adjust their basic prices to account for various customer differences and changing situations. There are a number of adjustment strategies. Color studio used the promotional pricing

strategy at their launch in August 2011 in Karachi. They went to various schools, colleges, universities and offered the students 25% to 30% discounts at the purchase of their products. PRICE BREAKUP : The product Nail color costs for Rs.250 each piece. The breakup of this cost according to the brand manager is, that, 10% to 15% margin at this normal cost is practiced. However there are retailers who keep 50% margin on new products, for eg: occasionally such as at valentine occasion they charged high mrgins. The discounts given to the wholesellers are 20% to 25%. Breakeven points depends on the market potential in long term.

FACTORS AFFECTING PRICE AT COLOR STUDIO Following are the factors affecting the prices at color studio,

(i) TARGET MARKET : color studio is catering to the needs of all social classes, they want the product to be easily accessible to customers as to penetrate more and more. They do the value based pricing keeping their target market in consideration. (ii) COMPETITORS PRICES : prices of the competitors, such as Medora, Atiqua Odho, and China cosmetics do affect the pricing of color studio brands. If the prices of the competitors keep changing, then definitely color studio also has to keep changing prices as to penetrate the market. (iii) PRICING OBJECTIVE : the company wants to survive for longer period and has to fix the prices which helps them to survive and remain in the markets. They focus on gaining maximum market share through market penetration. Color studio focuses on the availability of high quality product at low cost. Their USP is that their nail colors doesnt contain any harmul chemicals and are in much liquid form providing better results and satisfaction level to its consumers. (iv) DETERMINING DEMAND : Color studios has done a lot of research work in order to determine the demand of its cosmetics in Pakistan. They received a report on the potential in Pakistan for their

products from Euro Monetary Firm. The report specified that 14% to 16% is the market growth rate of Pakistan per year among the South Asian countries. Besides this, they conducted surveys in Karachi, Lahore, Islamabad to get the customer insights and to evaluate their demands. (v) PRICE SENSITIVITY : the price of the nail colors are such that its affordable by all classes, the cost is just Rs.250. They have kkept low price as to cater more and more demand. (vi) U.S.P : the USP of the nail colors is that they are in much thin liquid form providing better texture and ease of applying. There is no harmful chemical contents which may damage your nails, it is made from pure ingredients. PRICING: THE FLEXIBLE ELEMENT We know that pricing is the most flexible element of marketing mix, a company can change the prices according to the need of time. Color studios, as they are in their growth phase has kept such prices that help them to penetrate and gain maximum market share.

PROMOTIONS

SALES PROMOTIONS : Sales promotion consists of short term incentives to encourage purchase or sales of a product or service, sales promotion offers reasons to buy now. Sales promotions help to reinforce the products position and build long term customer relationships. Every sales promotion tool has the potential to build both short term and long term consumer relationships. PROMOTIONAL OBJECTIVE OF COLOR STUDIO The promotional objective of color studio is to enhance customer brand involvement. They want high involvement from customers perspective and they are using various promotional tools in order to achieve their objective. PROMOTIONAL ACTIVITIES AT COLOR STUDIO In the introduction phase of these nail colors, color studio professionals went to schools, colleges, universities, making younger customers to try out their product. They promoted their product by creating awareness among young generation. Infact, they provided their customers with promotional discounts upto 30% when they went to educational institutes. They have kept their products at many beauty salons so as to promote the product at large scale.The customers visiting the beauty parlors are provided with brand awarenes and discount offers. PROMOTIONAL BUDGET OF COLOR STUDIO Total marketing budget is decided at the beginning of year. This is their first year of operations in Karachi as they launched in August 2011. 8% to 10% of the total marketing budget is allocated for promotional activities.

PROMOTIONAL TOOLS Following is the list of promotional tools used by Color studio - Direct selling - Internet marketing - Brochures - Mobile setup: through which they make the customers experience their products - Word of mouth plays an important role for color studio - using celebrity : their model is Arij Fatima. DIRECT MARKETING USED BY COLOR STUDIO Direct marketing consists of connecting directly with carefully targeted individual consumers to both, obtain an immediate response and cultivate lasting customer relationships. Direct marketers communicate directly with customers, often on a one-to-one interactive basis. Color studio use detail databases, through which they tailor their marketing offers and communications to the needs of narrowly defined segments or even the individual customers. Color studis do the direct marketing using, -point of sales, - BTL -and events.

FORMS OF DIRECT MARKETING USED BY COLOR STUDIO (i) Catalog Marketing : Color studios have got their print catalogs that are available at all there outlets, beauty salons, and they also mail these catalogs to selected customers and also presented online. The catalog consists of their brand extensions as well as their line extensions. (ii) Kiosk Marketing : As consumers are becoming more and more comfortable with computer and digital technologies, many companies are placing information and ordering machines called kiosks. Color studio is one of such companies which uses kiosks at their stores. CROSS SELLING / UPSELLING AT COLOR STUDIO Upselling done by the front line staff, auch as if the customer visits the store to purchase lipstick, they saleman makes them aware of other good products of color studio and tries to sell them with what the needed product for customer is. There are more chances of upselling in malls, super malls.

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