DEVELOPING PRICING STRATEGY AND PROGRAMSPart

1

PRICE

The only element ofMarketing mix

That produces revenue

$299/-

Priceis not just a number on a tag

Rent, fees, fares, tolls, wages, commission, etc. all are also the PRICE you pay for some goods or service

Consumer Psychology and Pricing

Purchase decisions are based on how consumers perceive prices

NOT on marketer’s stated price

SO..

HOW DO CONSUMERS PROCESS AND EVALUATE PRICES

3 key points

How consumerperceive price

Referenceprice

Price-qualityinference

Price endings

Consumers compare an observed price to

an internal reference price the latest price they remember

an external frame of reference such as

“regular retail price”or

REFERENCE PRICES

Possible consumer Reference Prices

Fair Price Typical price last price paid Upper bound price Lower bound price Historical competitor price Usual discounted price

PRICE QUALITY INFERENCE

High price means high quality Low price means low quality

PRICE QUALITY INFERENCE

When information about truequality is not available price acts as a signal of quality

PRICE ENDINGS

$299/- $300/-Vs

PRICE ENDINGS

ODD ending price make consumer perceive price lower than actual

like

$299 gives feeling in range $200 rather than $300

RecapThree basic key that influence consumer behaviour

1.REFERENCE PRICE2.PRICE-QUALITY INFERENCES

3.PRICE ENDINGS

Disclaimer

Created by Khemendra Raj Pingoliya, IIT Kanpur during an internship

by Prof. Sameer Mathur, IIM Lucknow.

www.IIMInternship.com

THANK YOU !!!