Pricing Decision in Service Marketing

7/28/2019 Pricing Decision in Service Marketing

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Presentation On

Pricing Decision In Service Marketing

Presented to: Prof. Seema Ladda

Presented By:

Ashish Mishra A-40

Khushboo Kesari A-30


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What is service?Service is a set of one time consumable and perishable benefits

Core Services: A service that is the primary purpose of the

transaction. E.g.: a haircut or the services of lawyer or teacher.

Supplementary Services: Services that are rendered as a

corollary to the sale of a tangible product. Eg: Home delivery

options offered by restaurants above a minimum bill value


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Characteristics of Services

Intangibility

Perishability

Inseparability

Non ownership

Variability


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What is service Marketing?

Services marketing typically refers to both business to

consumer (B2C) and business to business (B2B) services, and

includes marketing of services like telecommunications

services, financial services, all types of hospitality services, car

rental services, air travel, health care services and professionalservice


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7P`s of Service Marketing

Product

Pricing

Place Promotion

People

Process

Physical Evidence


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Pricing Decision In Service Marketing


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What is pricing decision

Decisions faced by top management and marketing managers.

How much to charge for a product or service depends on a

multitude of factors such as competition, cost, advertising,

and sales promotion.

Economic theory suggests that the best price for a product orservice is the one that maximizes the difference between total

revenue and total costs. However, in reality, the price charged

is usually some form of cost-plus, which is later adjusted for

market conditions and competition.


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Pricing and Business

How companies price a product or service ultimately

depends on the demand and supply for it

Three influences on demand and supply:

1. Customers

2. Competitors

3. Costs


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Influences on Demand and Supply

Customers influence price through their effect on thedemand for a product or service, based on factors suchas quality and product features

Competitors influence price through their pricingschemes, product features, and production volume

Costs influence prices because they affect supply (the

lower the cost, the greater the quantity a firm is willingto supply)


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Service Pricing

Pricing is the mechanism by which sales are transformed into revenue

Why pricing of Service is critical?

1) Customers knowledge of service with respect to reference price.

2) Pricing of service is unique.

3) Providers may face difficulty in estimate price in advance.

4) Individual customer needs are different. So comparison of price becomedifficult.


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Objectives and Approaches in

Pricing a Service.

Pricing Objectives:

1) Survival

2) Profit or revenue maximization

3) Prestige

Approaches in pricing Services1) Cost based

2) Demand based

3) Competition based


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Factors Considered When Pricing a

Service

1) Role of non monetary cost

a) Time cost

b) Search cost

c) Convenience cost

d) Psychological cost

2) Competition3) Urgency

4) Economic Value in use

5) Market research


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Pricing Tripord

Pricing Strategy = Cost+ Competition+ Value tocustomer

The cost that a service provider needs to recoveris through imposing a minimum price or floorprice for a specific service offered. Which has tomatch with Customers perceived value of the

offering which sets a ceiling on the price.

Price = Direct Cost+ Overhead cost+ Profit Margin.


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4 Meaning of Perceived Value

1 Pricing strategies when customer means value is low price.

eg: Discounting, Penetrating pricing.

2 Pricing strategies when customer means value is every thing.

eg: Prestige pricing, skimming pricing.

3 Pricing strategies when customer means value is the qualityone get from the price.

eg: Value price, market segmentation pricing.

4 Pricing strategies when customer means value is all that oneget for all that one give.

eg: Result based pricing


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Documents

Pricing Decision in Service Marketing