DEVELOPING PRICING STRATEGIES AND PROGRAMS
HOW DO CONSUMERS PROCESS AND EVALUATE PRICES?
Tata DoCoMo was one of the first companies to use market
penetration pricing
price isNOT JUST A TAG !
Price has many components for example,
Customers pay through multiple forms
Jet airways uses Combination of cash and
frequent flier miles
WHYis pricing environment changing?
Access to creditUnique product formulationsEnticing marketing campaigns
SOUTH ASIAN – PRICING DILEMMA
Smaller segment of affluent customersLarger segment of aspiring customers
and strugglers
Different pricing for different customer groups with
different value propositions
Focus on image and upper end of the market
How buyers discriminate against sellers ?
Get instant price comparisons from thousands of vendors
Name their price and have it met
Priceline.comCustomer states the price he/she wants to
pay and it looks for any seller willing to meet that price
Get products freeFree software movement started by Linux
Even Microsoft, IBM, oracle and other major software producer are wondering : how do you compete with programs that
can had for free ?
How sellers discriminate against buyers ?
Monitor customer behavior and tailor offers
to individuals
Give certain customers access to special prices
FashionandYou.comLuxury shopping club for registered
members
Negotiate prices in online auctions and exchanges
Want to sell your old cellphone Post a sale on EBay.
Traditional
Price takers & accepted prices at
face value
Modern
Actually process price information
Reference pricing
Comparing and observed price to a internal reference price they remember
or an external frame of reference.
Many consumers
use price as an indicator of quality
Price quality inferences
A Rs.4000 bottle of perfume might contain Rs.400 worth of scent, but gift givers pay Rs. 4000 to communicate their high regard for the receiver
Price endings
Many sellers believe prices should end in an odd number
A study showed that demand increased by 1/3rd when the price of a dress rose from Rs.34
to Rs.39
LET’S RECAP
What is priceWays by which buyers and sellers discriminate against each other.Consumer psychology
Created by :Tanvi Maheshwari
Lady Shri Ram College for Women,
during an internship by Prof. Sameer Mathur,
IIM Lucknow