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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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