PRICING STRATEGY.pdf

Good

1. Dr. Shanti Suresh
SIES COLLEGE OF COMMERCE & ECONOMIC

2. OBJECTIVES
•Understanding the concept Pricing
•Objectives of Pricing
•Factors influencing pricing
•Pricing strategies

3. What is Price
Price is the amount of money charged fora
product or service, or the sum of the values
that customers exchange for the benefits of
having or using the product or service.
Price is the value that is put to a
product…

4. Pricing objectives
•Survival
•Maximum current profit
•Maximum marketshare
•Maximum marketskimming
•Product-qualityleadership
• Increase Sales Volume
• Company Growth
• Match Competitors Price
• Create Interest & Excitement about the Product
• Discourage Competitors From cutting Price
• Social, Ethical & Ideological Objectives
• Discourage New Entrants

5. Factor affecting pricing
•Fixed and variablecosts.
•Competition
•Companyobjectives
•Proposed positioningstrategies.
•Target group and willingness topay

6. PricingStrategy
•Pricing strategy refers to method companies
use to price their products orservices.
•The price of the products and services are set
on the basis theirexpenses
•They add on a certain percentage so they can
make aprofit.
•There are several different pricing strategies to
fulfil theirobjectives

8. Types of pricingstrategy
1.PenetrationPricing
2.SkimmingPricing
3.CompetitionPricing
4.EconomyPricing
5.Bundle Pricing(Combo)
6.PsychologicalPricing
7.PremiumPricing
8.One pricepolicy
9.DiscountingPricing
10.DiscriminatoryPricing
11.PromotionalPricing
12.Product linePricing

9. PREDATORY PRICING

10. PENETRATION PRICING

11. SKIMMINGPRICING

12. COMPETITIONPRICING

13. ECONOMYPRICING

14. BUNDLEPRICING

15. PSYCHOLOGICAL PRICING

16. PREMIUMPRICING

17. ONE PRICEPOLICY

18. DISCOUNTPRICING

19. DISCRIMINATORY PRICING
Charging a different price for the same good/service in
different markets
• Requires each market to be impenetrable
• Requires different price elasticity of demand in each
market
• Prices for rail travel differ for the same journey at
different times of the day

20. PRODUCT LINE PRICING

21. Setting PricingPolicy
1.Selecting the pricingobjective
2.Determiningdemand
3.Estimatingcosts
4.Analyzing competitors’ costs, prices, and
offers
5.Selecting a pricingmethod
6.Selecting finalprice

22. Price-Adjustment Strategies
•Adjusting Prices for Psychological
Effect.
•Price Used as a Quality Indicator.
•Temporarily Reducing Prices to
Increase Short-Run Sales.
•i.e. Loss Leaders, Special-Events
•Adjusting Prices to Account for the
Geographic Location of Customers.
•i.e. FOB-Origin, Uniform-Delivered,
Zone Pricing, Basing-Point, &
Freight-Absorption.
•Adjusting Prices for International
Markets.
•Price Depends on Costs, Consumers,
Economic Conditions & Other Factors.
Psychological Pricing
Promotional Pricing
Geographical Pricing
International Pricing

23. Value-Based versus Cost-Based
Pricing
9-
23
Copyright© 2011PearsonEducation,Inc.

24. Internal and External Considerations
Affecting Price Decision
Overallmarketing
Strategy,
Objectives& Mix
Organizational
Considerations TheEconomy
TheGovernment SocialConcerns
The Market
&
Demand
9-
24
Copyright© 2011PearsonEducation,Inc.

25. What products have inelastic
demand?
Elastic?

26. New-Product Pricing
Market-skimming
pricing
Market-penetration
pricing

27. PRODUCT MIX PRICING

28. PRICE ADJUSTMENTS

29. Responding to PriceChanges

30. Pricing within Channel Levels
Prohibit
Price fixing –talking
with competitors to set
prices
Predatory pricing –selling below
cost with the intention of punishing
a competitor orputting them out of
business

31. Pricing across Channel Levels
Prohibited
Price discrimination ensure
same price to customers at
given level oftrade
Price maintenance –requiring
dealers to charge a specified
retailprice
Deceptive pricing –seller
states price that may mislead
customers

32. Dr. Shanti Suresh, S.I.E.S College of Commerce & Economics
32