Stra Mkg Price Notes

8/9/2019 Stra Mkg Price Notes

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Marketing strategy is

a series of

actions

leading to a sustainable

competitive advantage.


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Marketing Management

PlacePlaceDistributionDistribution

PolicyPolicy

PricePricePricingPricing

PolicyPolicy

PromotionPromotionCommunicationCommunication

PolicyPolicy

ProductProductProductProduct

PolicyPolicy

TargetTarget

MarketMarket


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Nomura deal holds bonus rain

for Lehman Asia Staff:The Japanese financial services majorhas promised attractive retention

bonuses besides maintaining theexisting salary levels for Lehmanemployees across Asia.

Lehman India head Tarun Jotwani alonebeing offered closes to $10 million to

stay.


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PricePrice: The monetary mediumof exchange.

Utility: The attribute thatmakes it capable of wantsatisfaction

Value: The worth in terms ofother products.


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Geographical Perspectives

GeographicGeographicQuestionsQuestions

RegionRegion

LocationLocation PlacePlace

InteractionInteractionMovementMovement


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Importance of Price

Three variables that determine profit:

SalesVolume

SalesVolume

PricePriceX CostCost ProfitProfit- =


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Factors influencing the price

Internal Factors

Cost

Pricing Objective External Factors

Customers

Suppliers Competitors.


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Setting Pricing Policy

1. Selecting the pricingobjective

2. Determining demand

3. Estimating costs

4. Analyzing competitors

costs, prices, and offers

5. Selecting a pricingmethod

6. Selecting final price


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Types of Costs

Total CostsSum of the Fixed and Variable Costs for a Given

Level of Production

Total CostsSum of the Fixed and Variable Costs for a Given

Level of Production

Fixed Costs(Overhead)

Costs that dontvary with sales or

production levels.

Executive SalariesRent

Fixed Costs(Overhead)

Costs that dontvary with sales or

production levels.

Executive SalariesRent

Variable Costs

Costs that do varydirectly with the

level of production.

Raw materials

Variable Costs

Costs that do varydirectly with the

level of production.

Raw materials


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The Three Cs Model

for Price Setting

Costs Competitorsprices andprices ofsubstitutes

Customersassessmentof uniqueproductfeatures

Low Price

No possibleprofit at

this price

High Price

No possibledemand atthis price


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Pricing Methods

Markup Pricing

Target Return Pricing

Perceived Value Pricing Value Pricing

Going-Rate Pricing

Sealed-Bid Pricing.


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Some important pricingdefinitions

Utility: The attributethat makes it capable

of want satisfaction Value: The worth in

terms of other products

Price: The monetarymedium of exchange.

Value Example:Caterpillar

Tractor is $100,000 vs.

Market $90,000$90,000 if equal 7,000 extra durable

6,000 reliability

5,000 service2,000 warranty $110,000 in benefits -

$10,000 discount!


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Promotional Pricing

Loss-leader pricing

Special-event pricing

Cash rebates Low-interest financing

Longer payment terms

Warranties & service contracts Psychological discounting.


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Discriminatory Pricing

Time

Product-form

Customer Segment

Location


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Price-Reaction Program forMeeting a Competitors Price Cut

Has competitorcut his price?

NoNoHold our price

at present level;continue to watch

competitorsprice

Is the pricelikely to

significantlyhurt our sales?

YesYes

Is it likely to bea permanent

price cut?YesYes

By more than 4%Drop price tocompetitors

price

By 2-4%Drop price by

half of thecompetitors

price cut

How much hashis price been

cut?YesYes

NoNo NoNo

By less than 2%Include a

cents-off couponfor the nextpurchase


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Pricing Challenges

Skimming Using high-priced unique products to achieve the

highest possible contribution in a short initial timeperiod, then gradually lowering the price as the market.

Market Pricing

Following competitive pricing in the target market;adjusting production and marketing mix to competitiveconditions.

Penetration Pricing

Offering low pricing to generate volume sales whichhopefully will compensate for low margins.


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Consumer Categories

Category Annual Income Life style

Quality conscious Over Rs. 1,50,001 Very Rich

Value Conscious Rs.45,001-1,50,000 Consuming class

Price Conscious Rs.22,001- Rs.45000 Climbers


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Price in Marketing MixRural

Consumers

Product Price Promotion Place

Quality consciousconcerned withfunctionalbenefits value for

money

PremiumProduct

High High Show rooms,Malls,

Valueconscious Pricesensitiveconcern with

functionalbenefits

Mass Products Medium High General andfancy storespaan shops andhaats

Price conscious Spuriousproducts

Low No Kirana, paanshops and haats


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Videcon :Pricing StrategyVidecon was one of the first companies to

enter the rural market with a plethora ofproducts in the home appliances. It attacksmarket leader Phillips by launching a radio setfor Rs.180(the Phillips radio set cost Rs.250)and grabbed a major chunk of the market.

Low Priced shampooCavinkare realized that for a family of fivemembers at rs.2 per sachet and minimum offour hair washes per person per month would

mean a Rs. 40 spend for a shampoo . Manyrural families cannot be afford expense.


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Operation Bharat: Bundle-Price

StrategyHLL launched a combo pack comprising a Clinic shampoobottle, a tube each of pepsodent and Fair & Lovely ad Pond;sDream Flower Talc for rural areas. HLL provided hampers atdiscounted prices of Rs. 5 Rs.10 and Rs.20 each in differentsizes and combinations. The project was aimed ataddressing issues of consumers awareness, attitudes andhabits As consumers in rural areas were exposed to andbecame familiar with such value added value for moneyalternatives.

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Stra Mkg Price Notes