Pricing and it's relation with other p's of marketing

8/8/2019 Pricing and it's relation with other p's of marketing

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Pricing and its Relation With Other Ps of Marketing .By- Raghvendra patel

-:TOPIC:-


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PRICINGPRICE IS ALL AROUND US..

Rent for a building

Tariff for phone

Airlines,Rly.,Bus,Cab.Fare


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PRICEThe amount of mon ey charged for a

pro duct or s ervic es or t he sum of t he valu es that consum ers exchang e for t he benefit of having or using t he pro ductor s ervic e.

Price = Cost + Profit


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F our Ps of Marketing


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F our views of price Economists view: Pric e is set by the forc es of suppl y & deman d.A ccountants view: Pric e shoul d cov er costs so t hat

profit can b e earn ed .C ustomers view: Pric e has to r e pr esent goo d valu e.

M arketers view: Pricing is an opportunit y to gaincomp etitiv e advantag e.


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P ricing

A firm must s et a pric e for t he first tim e when..

It develops a n ew pro duct.It intro duces its r egular pro duct into a n ewdistribution c hann el or g eograp hical ar ea.


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Pricing ObjectivesSurvival

Target r eturn oninv estmentMark et shar ePro duct qualit y

Mee ting comp etition

Profit ma ximisationMaintaining t he imag e


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F actors influencing pricing decisions

Costs of pro duction

Comp etitiv e pric esCustom ers perce ptionof valu eCustom er deman dTarget mark et

Mark eting mi x

Stat e of the econom yEx pectations of distributorsStat e of comp etition inthe mark et


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Pricing ApproachSelecting t he pricing obj ectiv e

Determining deman d

Type of Market

Priceelasticity


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CONT.

Estimating costs

Anal yzing comp etitors costs, pric es, off ersSelecting a pricing m ethod.

FixedCost

VariableCost

LearningCurve


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Pricing strategiesMarket-oriented pricing: Setting a pric e bas ed uponanal ysis an d r esearch.

Target pricing: T argeted for a particular rat e of r eturn.

Price discrimination: Setting a diff er ent pric e for t he sam e pro duct in diff er ent segments to t he mark et.


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CONT.

Premium pricing: P ractic e of k ee ping t he pric e of

a pro duct or s ervic e artificiall y high in or der toencourag e favorabl e perce ptions among bu yers.

Predatory pricing: Aggr essiv e pricing int ended todrive out comp etitors from a mark et.


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CONT.

Absorption pricing: Method of pricing in

which all costs ar e r ecov er ed.

Marginal-cost pricing: Setting t he pric e of a

pro duct to equal t he extra cost of pro ducing anextra unit of output.


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Market skimmingH igh Pric e, Low Volum es.Suitabl e for pro ducts t hat have shortlif e cycles.R esults in f ewer mostProfitabl e sales.

Exampl e-Je wellar y,new Dv ds, Digitaltechnolog y,pla ystation .


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Market PenetrationLow Pric e, high Volum e

Suitabl e for pro ducts w hich have long lif e cycles.Useful in launc hing into n ew mark et.

Gain mark et Shar e.Exampl e-F ood Stuffs, H ous ehold goo ds.


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Product Mix Pricing StrategiesProduct Line Pricing

- Setting Pric e Ste ps B etween Pro duct Lin e Itemsi.e. Rs. 299, Rs. 399

By-Product Pricing- Pricing Low -Valu e By-Pro ducts To G et Rid of The m

i.e. Lumber Mills, Zoos


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Cont

Captive Product Pricing

- Pricing Pro ducts That Must B e Used Along Wit h The Main Pro ducti.e. Razor Blades, Film, Software, telephone

Optional-Product Pricing

- Pricing Optional or acc essor y Pro ducts Sol d Wit h The Main Pro ducti.e. Car Accessory


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Cont..

Product Bundle Pricing

- Bun dles Of Pro ducts Sol d Together at a R educed Pric e.i.e. Season Tickets, Computer Makers

Two Part Pricing- Consisting of fi xed f ee plus a variabl e usag e f ee.


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Price Adjustment StrategiesDiscount an d Allowanc e Pricing

Segmented PricingPsychological PricingPromotional Pricing

Geograp

hical PricingInternational Pricing


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D iscount and Allowance Pricing

DISCOUNT- R eduction in pric e on purc hasesduring a stat ed period of tim e.

ALLOWANCE- Anot her ty pe of r eduction from t he list pric e.


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D iscounts and AllowancesCas h discount

Qualit y discountFunctional discountSeasonal discountTrade in allowanc e Promotional allowanc e


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Segmented Pricing

Selling a pro duct or s ervic e at two or mor e diff er ent

pric es wher e the diff er ence is not bas ed on t he diff er ence in cost.Customer segment pricing: e.g. Airfar e for c hildr en

(12 years) an d adultsP roduct form pricing: e.g. Nokia 1100 ,3310L ocation pricing: e.g. The aters


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Psychological pricingIt is us ed to lessen the impact of t he actual pricing inthe consum ers min d.It is us ed as a surrogat e to in dicate the pro ductqualit y or esteem.


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P romotional P ricingLoss l eader pricing - Selling at a loss

Cas h r e bat e - fr ee servic es, long er warranti es

Warranti es an d servic e contracts

Special event pricing


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Geographical Pricing

Pric e vari es de pending upon t he location of the custom er (countr y/zone wis e/Uniformdeliver ed Pricing)


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International PricingAd justing pric es for Int ernational Mark ets.

Pric e de pend upon cost, consum ers, Economiccon ditions an d other factors.


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Takers, makers, leaders & followers

Price takers: have no option t han to c hang e the ruling mark et pric ePrice makers: able to fi x the ir pric ePrice leaders: the industr y leaders w hose

pric e chang es ar e follow ed by rivals

Price followers: follow t he pric e changinglead of the industr y leader


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Pricing and it's relation with other p's of marketing

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