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Prepared by:-Jaydip ParmarPranav GosliyaParth ShahNiraj KhatriSagar Jadav
Submitted To:-
Professor Jayrasinh Jadeja
Price
The amount of money charged for a product or
service, or the sum of the values that consumers
exchange for the benefits of having or using the
product or service.
These commodities and services are Brands … !!!For which the pricing strategies are designed
NEW
1.
Market skimming pricing
Market skimming pricingis a strategy with highinitial prices to “skim”Revenue layers from themarket.
APPLE i-PodOBJECTIVE
New product ,new market… A new way of listening to music
STRATEGYKeep the prices high, aggressive promotion
Penetration Pricing
Companies set a low price in order to attract a large number of buyers quickly and win large market share.
Example: In India Dell use penetration pricing strategy because Indian market are highly affected by the price. It increase sales as compare to HP, Sony and other competitors.
Rs.10500
Rs.14999
Rs.14249
Competitive pricingIn competitive pricing, a seller regularly offers
products priced as low as possible and accompanied by a minimum of services.
Product Mix Pricing Strategies
• Product line pricing• Optional product pricing• Captive product pricing• By-product pricing• Product bundle pricing
2.
Product line pricing
Product line pricing takes intoaccount the cost differencesbetween products in the line,customer evaluation of theirfeatures, and competitors,prices.
For example, Bata offers entirerange of footwear in India fromRs. 749 to Rs. 2499. It includechildren’s section shoes toordinary leather shoes.
Rs. 749
Rs. 2499
Optional product pricingOptional product pricing
takes into account optional
or accessory products along
with the main product.
For example, A car buyer
have a choice to order a
music system, GPS
navigation system or not to
order such high quality and
simply buy car.
Captive product pricing
Captive product pricinginvolves products that must beused along with the mainproduct.
For example, blades for a razor Two-part pricing is where theprice is broken into: Fixed fee -- Razor priceVariable usage fee -- Blades price Gillette Mach3 razor price Rs.150
and 8 Blade for Rs. 427
By-product pricing
By-product pricing refers to products with little or no value produced as a result of the main product. Producers will seek little or no profit other than the cost to cover storage and delivery.
For example, wastage of the products turn into profit making products through converting wastage into using product. e.g. Papermaker company.
Product bundle pricing
Combining two or more products and offering the bundle at a low or reduced price.
For example,
Price Adjustment Strategies
• Discount pricing• Segmented pricing• Psychological pricing• Promotional pricing• Geographical pricing• Dynamic pricing• International pricing
3.
Discount pricingEarly payment of bill, volume purchase, off season buying orPromoting the
product.
Cash disc.“2/10, net 30’’
Segmented pricing
It is used when a company sells a
product at two or more prices even
Though the difference is not based
on cost.
Customer segment pricing– e.g. Museum
Product form segment pricing –mineral water bottle
Location pricing – e.g. Theaters
Silver - Rs.150, Golden- Rs.200, Platinium- Rs.250
1-liter bottle cost Rs.155-liter bottle cost Rs.60
Psychological pricing
It occurs when sellersconsider the psychologyof prices and not simplythe economics.
Reference prices arePrices that buyers carryin their minds and referto when looking at agiven product.
Promotional pricing
Companies will temporarilyprice their products belowList price and sometimeseven below cost to createBuying excitement andincrease demand.
-Loss leaders pricing - Special event pricing-Cash rebates pricing - Low interest financing,longer warrantees, and free maintenance
Promotional pricing
It is used setting prices for customers located in differentparts of the country or the world• Free On Board pricing• Uniformed delivery pricing• Zone pricing• Basing point pricing
Geographical pricing
Dynamic pricing
Adjusting prices continually to meet the characteristics
and needs of the individual customer and situations.
International pricingCompany should charge pricing in a specific
countryAfter showing many factors like Economic
conditions,Competitive conditions, Laws and regulations
etc.They can set their pricing. A Mc Donald’s Big Mac
costs $3.57 in U.S., $7.80 in Norway, $1.62 in India.
Price Changes
Initiating Pricing Changes
Price cuts is a reduction in price• Excess capacity• Increase market share
Price increases is an increase in selling price
• Cost inflation• Increased demand and lack of supply
4.
Buyer Reactions to Pricing Changes
• Price cuts• New models will be available• Models are not selling well• Quality issues
• Price increases• Product is “hot”• Company greed
Responding to Price Changes
Questions• Why did the competitor change the price?• Is the price cut permanent or temporary?• What is the effect on market share and
profits?• Will competitors respond?
Responding to Price Changes
Solutions• Reduce price to match competition• Maintain price but raise the perceived
value through communications• Improve quality and increase price• Launch a lower-price “fighting brand”