GROUP MEMBERS

Name Roll No.

Nitin Mahalley 50
Deboshree Majumdar 51
Chetan Medpalliwar 54
Ashish Nakade 62
&
Prof. Deepak Bhattacharya
V °ntroduction to the Concept

V Methods of Pricing

V Types of Strategies
Êideo
°NTRODUCT°ON OF THE CONCEPT
 S°GN°F°CANCE OF PR°CE

Price has a special significance mainly for three reasons:

V Revenue Generator- °t ultimately Dzpaysdz for all of a

firms activities.

V Determination Of Demand- Price is a competitive

tool. °t influences the quantity demanded.

V Price : A Key Factor °n Marketing Mix- °t has a close

relationship with other marketing mix variables.
 Price Price Price
& & &
Product Promotion Distribution

Convincing
The Persuading
Positioning Customers Customers
Consumers
 CHARACTER°ST°CS OF °NDUSTR°AL
PR°CES

V Pricing is not independent

V Strategic and tactical

V Pricing is creative

V Pricing needs fairness

 GROUP D°SCUSS°ON

°ndustrial pricing V/s Consumer Pricing

 CONSUMER V/S °NDUSTR°AL
PR°C°NG
ASPECT °NDUSTR°AL CONSUMER
PR°C°NG PR°C°NG
List Price jesides price, Price is the major
discounts, delivery, determinant. Quite
installation and often, the list price.
training are
considered.

Evaluation jased on firms jased on

value chain and satisfaction and
competitive competitive
offering offerings.
 CONSUMER V/S °NDUSTR°AL
PR°C°NG
ASPECT °NDUSTR°AL CONSUMER
PR°C°NG PR°C°NG

Buyers Professionals. °ndividuals. Less

Members of buying capable of
center can extract extracting value for
value for money. money.

Bargaining Competitive Auctions and

bidding and Haggling.
negotiation.
 °N GENERAL TERMS. . . . . . .
B2C B2B
Product driven Relationship driven

Maximize the value of the transaction Maximize the value of the relationship

Large target market Small, focused target market

Single step buying process, shorter sales cycle Multi-step buying process, longer sales cycle

jrand identity created through repetition and jrand identity created on personal relationship
imagery

Merchandising and point of purchase activities Educational and awareness building activities

Emotional buying decision based on status, desire, Rational buying decision based on business value
or price
 FACTORS °NFLUENC°NG PR°C°NG
DEC°S°ONS
Setting the price for a new product or changing the price for an
existing product involves the consideration of several °nternal
and External Factors

V °NTERNAL FACTORS
Costs, Product line, Marketing strategy and Management
judgment.

V EXTERNAL FACTORS
Demand, Competition, Channels, Product life cycle,
Economic conditions and Political- legal system.
 °NTERNAL FACTORS

V Cost

V Product line

V Marketing objectives and strategy

V Managements judgment
 EXTERNAL FACTORS

V Demand

V Product-life cycle

V Channel factor

V Economic conditions and Political-legal factors

V Competition (Monopoly, Oligopoly, Monopolistic-

 STEPS °N SETT°NG PR°CES

Selecting the
Determining Estimating
pricing
the demand costs
objectives

Selecting a
Fixing the Analyzing
pricing
final price competition
method
 Pricing situations and objectives

S°TUAT°ON OBJECT°VES

Over capacity, intense competition, SURV°VAL

changing customer wants

Market fluctuations many, intense PR°CE STAB°L° AT°ON

competition

Product in maturity stage RETA°N MARKET SHARE

Product in decline stage M°LCH THE COW: GA°N

MAX°MUM BENEF°T
BEFORE DROPP°NG
 STEPS °N SETT°NG PR°CES

Selecting the
Determining Estimating
pricing
the demand costs
objectives

Selecting a
Fixing the Analyzing
pricing
final price competition
method
 Selecting a pricing method

V There are many pricing methods in relation to the basic

considerations under different pricing situations.

PR°C°NG FRAMEWORK
S°TUAT°ON MAJOR APPROACH METHOD
FACTORS
New product Demand: Elastic, Cost-oriented, Cost-plus or
introduction °nelastic Demand- mark up,
oriented Skimming,
Penetration
Mature markets, Competition Competition Price leadership,
Stiff competition oriented Competitive
bidding
 STEPS °N SETT°NG PR°CES

Selecting the
Determining Estimating
pricing
the demand costs
objectives

Selecting a
Fixing the Analyzing
pricing
final price competition
method
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Pricing methods

Cost based
Methods

Competition
jased
Methods

Demand
jased
Methods
 Cost based Methods

V Cost plus Method:

Popularly employed by Construction companies,
Consultants, and Doctors
V Marginal Cost Pricing:
=or companies wants to introduce new
product
V Experience Curve Pricing:
=or existing Companies
 Competition jased

V Trade Association pricing:

=or firms makes agreements to maintain
prices at a similar level
V Price leadership:
=or the firms whose production cost is low and
they dominate the industry
V Competitive bidding:
jid win contract
 Demand jased Price

V Perceived value Analysis:

Êalue for money

Direct price method:

Êalue of a product as a whole is perceived

Direct percived value rating method:

juyers are asked to assign value ratings

Diagnostic method:
juyers Compare the products in competition
V Price Discrimination:
Selling the same or slightly differentiated product
to differentiated product to different sections of
consumer at different prices
 =lexible Pricing

V List and Net price

V Rebates

V Allowances

V Discounts
TYPES OF PR°C°NG STRATEG°ES

V Product Mix Pricing Strategies

V Product life Cycle Strategies
V Technology Adoption Cycle Pricing Strategies
V jusiness Cycles
V Government
V Competitive Strategies
PRODUCT L°FE CYCLE PR°C°NG
STRATEG°ES

!e etrati i i

!erceived
C petitive
Êalues
Role
Playǥ
Low sales, high cost per customer, few competitors

Stage - Introduction

Pricing Policy - Skimming

 Rapidly raising sales, moderate costs,
growing competition

Stage - Growth

Pricing Policy - Promotion/Penetration Pricing

Peak sales, low costs, stable competition

Stage - Maturity

Pricing Policy Ȃ Competitive Pricing

=alling sales, low costs, declining competition

Stage - Decline

Pricing Policy - Price Cutting

PRODUCT-M°X PR°C°NG STRATEG°ES

Optional Captive
Product Line
=eature Product
Pricing
Pricing Pricing

Product
Two Part jy Product
jundling
Pricing Pricing
Pricing
 Product Line Pricing

p
 

    

V Differet Products
V Pricing Products that differ in size
V Special Order Pricing
V Pricing Complementary Products
 Captive Product Pricing

V Pricing repair parts / spare parts

V Products like two wheelers or four wheelers need spare
parts and servicing
V To induce purchase, the marketer may price the parts
high and keep captive prices low or vice-versa.
 Optional Feature Pricing
V To attract buyers, marketers offer optional product
features and services along with the main product.
An economy buyer can go for Ǯno frillsǯ model.

Two Part Pricing

V This is a form of captive pricing used in case of

services. The price of the service is broken into two
parts Ȃ fixed charges & variable charges based on
usage rate.
 By-Product Pricing
V Companies search for uses of the by-product & try
to sell them at a price that recovers the cost of
storing & delivering it to buyer.
V This Practice will help lower the price of the main
product and make it more competitive.

Product Bundling Pricing

V A group of products is sold at a price lower than

the total of the price of the individual products.
V The difference provides an incentive to buy the
bundle rather than the individual product.
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Êideo
 Technology Adoption Cycle Pricing
Strategies:

Introduction Stage

Early Growth Stage

Rapid Growth Stage

Maturity

Decline
Pricing Stragies Over B siness Cycle:

Income Price of
Cost Changes
Changes S bstit te

Changes in Ind stry other

General Price Market Share Price
Level Determinants
Pricing Strategy °nfluenced jy
Government

Administered
or Retension
Pricing

D al Pricing
 Case Study

Title: Pricing of an Innovative product

V Sol tion:
Introd ction
The problem
Ass mptions
Possible sol tion and their eval at tion
Selection of the best sol tion
Thank
You !!!