Guided By: Prof.

Mukesh Ranga

Presented By: Archana Sharma Shikha Gupta M.B.A.(B.E.) 3rd sem I.B.M. Batch (2011-2013)

Pricing

Price is a major element of the marketing mix.it is an important strategic issue because it is related to product positioning. Pricing is a determinant of the market demand for the product. But before any pricing decisions are undertaken ,it is important that the factors influencing price are understood. These factors can be categorized as internal and external

Influencing factors as internal and These factors can be categorized

external factors Internal factors : The internal factors affecting price include cost and the companys pricing objectives. cost factors Promotion as a cost factor Credit based transactions increase costs Pricing Objectives Profit maximization in the long run Minimum returns on sales turn over Deeper penetration of the market


Keeping up with the competition Increasing sales volume and market share External factor: This factor includes Customers Suppliers Competitors Legal environment

Pricing strategies
Optional product pricing Captive product pricing Product bundle pricing Penetration pricing Economy pricing Value pricing Coinage pricing Psychological pricing


Discounts and allowances: Cash discounts or bargaining benefits Free gift Schemes for retailers Discriminatory pricing: Customer segment pricing Product form pricing Location pricing

Optional product pricing

Optional product pricing is the pricing of optional or accessory products along with the main product like a company selling tractors for a low sticker price but charging high prices for serving and spare parts. Ex:

Captive product pricing

Captive product pricing is setting a price for products that must be used along with the main product , such as blade for a razor and film for a camera. Ex:

Product bundle pricing

Product bundle pricing is combining several products and offering the bundle at a reduced price . Companies very commonly use this pricing strategy during periods of inflation it helps to generate sales and attract customers in a highly competitive market , it is mostly used in festival.

Penetration pricing

A penetration pricing policy involves setting prices of products relatively low compared to those of similar products. This pricing policy is appropriate when demand is elastic. Ex: Anchor white and Ajanta tooth pastes used this pricing to enter the crowded dental cream market

Economy pricing

Economy pricing is no-frills low price, the cost of marketing and manufacturing are kept to a minimum. Regional and local manufacturers usually follow this economy pricing strategy as they have limited investments to make on building brands and developing channels. Ex: Nirma & Ghari

Value pricing

When economic recession or increased competition forces a company to provide value products and services to retain sales. Ex: Godrej No.1 soap placed their offering containing rose, sandalwood neem and other ingredients at a very economical price .

Coinage pricing

Prices are set of a coin value. Coinage price is directly proportionate to the package size. These packs are small in size and are normally meant for one time consumption(shampoo sachet)or days consumption(tea bag)or a weeks consumption(bathing or washing soap).

Psychological pricing

The price quality relationship refers to the idea that consumers tend to equate product quality with the price charged. In the color TV segment LG at a higher price is considered a better buy than Texla and Jolly brands particularly in R1 households.

Discounts and allowances

Cash discounts or bargaining benefits Free gift Schemes for retailers Discriminatory pricing

Discriminatory pricing

Price discrimination exists when sales of identical goods or services are transacted at different prices from the same supplier, different prices are charged on the basis of different consumer groups, location, product form etc. discriminatory pricing may take the following norms Consumer segment pricing Product form pricing Location pricing

Consumer segment pricing

Discriminatory pricing based on consumer segments. Ex: Museum often charge low admission fee for students and senior citizens.

Product form pricing

Different versions of the same product are priced differently but not proportionately to the increase in costs. Ex: Microsoft sold different versions of its operating software windowsXP at different price level . Windows vista home basic version is sold at $200 and with some variations the same operating software windows vista ultimate version is sold at $320.

Location pricing

Discriminatory pricing based on different locations, even though the cost of offerings at each location is identical. Ex: Theatre charges different prices for different audience preferences for different locations.

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