My Pricing- Ppt

8/9/2019 My Pricing- Ppt

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PRICINGPRICING--


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Importance of price tomarketers

Price is a key element in the marketing mixbecause:

Directly

- Price relates directly to the generation of total

revenue -Price is also the only marketing mix elementthat generates revenue, others are costs

Indirectly -Price can be a major determinant of the

quantity of goods sold

-Price also influences total costs through itsimpact on quantity sold Symbolically Price has a psychological impact on customers By raising price the quality of the product can

be emphasised By lowering price marketers can emphasis a


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decisions INTERNAL FACTORS:

Costs - the relationship between price and cost; balancing

the need to cover costs against the price the market willbear.

Organisational objectives - the role pricing can play in

achieving long and short-term corporate objectives.

-


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Contd EXTERNAL FACTORS:

Demand- The market demand for a product or service has abig impact on pricing.

Competition What price does the competitor is charging

for similar products and possibilities lie ahead for raisingand lowering prices.

Buyers- The nature and behavior of the consumer and usersto purchase a particular product.


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Pricing - link between priceand business objectives.

The pricing objectives of businesses aregenerally related to satisfying one offive common strategic objectives:

Objective 1: To Maximize Profits Although the maximization of profits

can have negative connotations forthe public, in economic theory, onefunction of profit is to attract new

entrants to the market and theadditional suppliers keep prices at areasonable level. By seeking todifferentiate their product from thoseof other suppliers, new entrants alsoexpand the choice to consumers, and

may vary prices as niche marketsdevelop


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Contd . .

Objective 2: To Meet a Specific TargetReturn on Investment (or on net sales)

Assuming a standard volume operation (i.e.production and sales) target pricing isconcerned with determining the necessarymark-up (on cost) per unit sold, to achievethe overall target profit goal. Target returnpricing is effective as an overall performancemeasure of the entire product line, but forindividual items within the line, certainstrategic pricing considerations may requirethe raising or lowering of the standard price.

Objective 3: To Achieve a Target Sales Level Many businesses measure their success in

terms of overall revenues. This is often aproxy for market share. Pricing strategies withthis objective in mind usually focus on settingprice that maximizes the volumes sold.


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Contd. . . .

Objective 4: To Maintain or Enhance MarketShare

As an organizational goal, the achievement of adesired share of the market is generallylinked to increased profitability. An offensivemarket share strategy involves attainingincreased market share, by lowering prices inthe short term. This can lead to increasedsales, which in the longer term can lead tolower costs (through benefits of scale andexperience) and ultimately to higher pricesdue to increased volume/market share.

Objective 5: To Meet or Prevent Competition Prices are set at a level that reflects the

average industry price, with smalladjustments made for unique features of thecompanys specific product(s). Firms thatadopt this objective must work backwardsfrom price and tailor costs to enable the


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PRICING STRATEGY


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SETTING PRICING POLICY


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PRICING OBJECTIVES

SURVIVAL

MAXIMUM CURRENT PROFIT

MAXIMUM MARKET SHARE

MAXIMUM MARKET SKIMMING


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No possible Profit

at this Price

DETERMINING PRICING METHOD

High PriceNo possible Demand

at this Price

Low Price

Cost FLOOR PRICE

Customer Assessment

& Demand CEILING PRICE

Competitors &

Substitute Price ORIENTATION POIN


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PRICE - QUALITY STRATEGIES

Premium

Strategy

Overcharging

Strategy

Good-Value

Strategy

Economy

Strategy

Price

Higher Lower

High

er

Lower


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Selecting a Pricing Method

Markup Pricing

Target-Return Pricing

Perceived-Value Pricing

Value Pricing

Going Rate Pricing

Sealed-Bid Pricing

Pricingmethods


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Markup Pricing

Elementary method - add standard markup toproduct cost

Most popular pricing method

e.g. Resellers / Retailers


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Target Return Pricing

Determine the price that would yield its targetrate of Return on Investment (ROI)

Break-even Volume

e.g. MHADA


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Perceived-Value Pricing

Use of Marketing Elements Advtg & Sales

e.g. Luxury Brands

Buyers perception of value not sellers cost


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Value Pricing

Everyday low pricing (EDLP)

High-low pricing

Low price for a high-quality offering

e.g. Supermarkets


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Going Rate Pricing

Based on Competitors Pricing

Follow the Leadere.g. Bottled water, Soft Drink, Toothpaste etc.


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Sealed Bid Pricing

Pricing based on expectations how competitorswill price rather than on costs or demand

e.g. Bids for Government Project


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NEW PRODUCT PRICING STRATEGIES


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PRODUCT MIX PRICING STARTEGIES

Product Line PricingProduct Line PricingSetting Price Steps Between Product Line Items

i.e. Rs.299, Rs.399

Optional-Product PricingOptional-Product PricingPricing Optional or Accessory ProductsSold With The Main Product

i.e. Car Options

Captive-Product PricingCaptive-Product PricingPricing Products That Must Be Used

With The Main Producti.e. Razor Blades, Film, Software

Product-Bundle PricingProduct-Bundle PricingPricing Bundles Of Products Sold TogetherPricing Bundles Of Products Sold Together

ProductMix

Pricing

Strategies


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= -Price Adjustment

Strategies=


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PRICE-ADJUSTMENT STRATEGIES


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Initiating and Responding to Price Changes


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Initiating and Responding to Price Changes

InitiatingPriceIncreases

CompetitorReactions

toPrice

Changes

InitiatingPrice Cuts

Buyer

ReactionstoPrice

Changes

PriceChanges

P i Adj S i


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Price-Adjustment StrategiesPrice-Adjustment Strategies

HoldCurrentPrice;ContinuetoMonitorCompetitorsPrice.

HoldCurrentPrice;ContinuetoMonitorCompetitorsPrice.

ReducePriceReducePrice

RaisePerceivedQuality

RaisePerceivedQuality

ImproveQuality&IncreasePriceImproveQuality&IncreasePrice

LaunchLow-PriceFightingBrandLaunchLow-PriceFightingBrand

HasCompetitorCutPrice? HasCompetitorCutPrice?

WillLowerPriceNegativelyAffectOurMarketShare&Profits?

WillLowerPriceNegativelyAffectOur

MarketShare&Profits?

Can/ShouldEffectiveActionbeTaken?Can/ShouldEffective

ActionbeTaken?Yes

No

No

No


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-- thank youthank you--

My Pricing- Ppt

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