Ditch the discounts
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Transcript of Ditch the discounts
If the economy is showing signs of life, the recent unemployment numbers are encouraging. Your company probably took a serious margin hit duringthe recession and now input costs are rising. So here you are, sitting at yourdesk thinking, “Given this market environment, I need to revamp my pricing strategy…but what should I do?” This slide is to help you price for profits and growth.
Discounting your establishedbrands tells the market two things: your prices were too high before, and your products won’t be worth the price in the future once the discounts are gone
What smart companies do: Adapting The Price
different customers have different needs and therefore place different values on a given product or service
Some examples
Hyundai let buyers wholost their jobs returntheir vehicles. It thusavoided further pricecuts—and in nine months,fewer than 50 vehicleswere returned
The perceived value of a product as simple as a black T-shirt depends in part on where it is sold
Some Examples
Because of its high standards for quality and continual innovation, PACCAR can charge a premium for its trucks
Some Examples
Telecom Companies
They unbundle their services and then keep extra charges on each service they provide like
tariff plan, data plan etc.
Oil and Soap Companies
They reduce the product volume and thus reduce manufacturing cost result in higher profit
News Paper
On a Particular day they offer something special and charge extra for this-like Hindustan Times ”Sunday Special”
Indian Railway
Indian Railway offers seasonal ticket for short distances as a method of “Pricing strategy”
Apple- highly differentiated product
Apple can increase price of it’s products based on their excellent quality
Summary
After Recession it’s very necessary to Reprice for recovering growth and profit of the company. This presentation shows how to price in this situation in Indian market as well as world market with ditching the discount. Some common pricing methods are: Introduce Lower-Priced Versions Use Promotions to Avoid Price Drops Adapt Products to Maintain Affordability Unbundle Services And Add Extra Fee Withdraw Recession-Pricing Tactics Introduce New Premium Products Increase the Price of Regular Products Offer New Ways to Experience Luxury
Credit
KOTLER, P. & KELLER, K. 2011. Marketing Management 14th Edition,Upper Saddle River, NJ, Prentice Hall.
Rafi Mohammed, “Ditch the discounts”,Harvard Business Review, Jan-Feb, 2011, p. 23-25.
Eric Mitchell, “How Not to Raise Prices,” Small Business Reports, November 1990, pp. 64–67. (With due thanks to the owners of Photographs)