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 PRICE- The amt of money charged for a product

or service, or the sum of the values that
Pricing consumers exchange for the benefits of having
or using the product or service.
The role pricing in marketing,
Pricing policies,
Pricing strategies

FACTORS AFFECTING PRICING DECISIONS

SIX-STEP PROCEDURE OF PRICE SETTING:
Selecting the Pricing Objective  Price & Non – Price Competition

Determining the Demand

 Organizational and Marketing Objectives,
Estimating the Costs
 Need to be consistent with companies goals.
Analysing Competitors’ Cost Price and
Offers
 Analysis of Demand, Cost and Profit Relationships
Selecting a Pricing Method
 Need to set a price that covers all costs.

Selecting the Final Price

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FACTORS AFFECTING PRICING DECISIONS
 Types of Pricing Objectives
 Profit
 Market share
 Cash flow, recover cash as fast as possible,
especially with products with short life cycles.
 Status Quo, maintain market share, meeting
competitors prices, achieving price stability or
maintaining public image. Primarily for non price
competition.
 Survival, accept short term losses necessary for
survival.
FACTORS AFFECTING PRICING DECISIONS
 Other marketing Mix variables,
 Product
 Place
 Promotion
 people
 Channel Member Expectations,
 May use price guarantees to assure wholesalers/retailers
that the price they pay is the lowest available.
 Cooperation depends on the equitable distribution of
costs and profits within the channel.
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FACTORS AFFECTING PRICING DECISIONS
 Buyers Perceptions,
 Percent change in quantity demanded relative to
the percent change in price.
 % change in Qty demanded
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% change in price
 The actual impact on demand as price varies.
 Elastic demand is more sensitive to price than
inelastic demand.
 Skimming vs. PENETRATION PRICING :
DISADVANTAGE
 The likelihood of competing suppliers
following suit by reducing their prices also,
thus nullifying any advantage of the
reduced price.
 The impact of the reduced price on the
image of the offering, particularly where
buyers associate price with quality.
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TYPES OF PRICE POLICIES:

 Odd-even pricing, end prices with a certain  Easy to administer.

number, Rs. 99.95 sounds cheaper than
Rs.100.,  COST-PLUS PRICING :

 Cost calculated then % added.

 Price bundling, Offer a product, options, and
customer service for one total price.
 Prestige Pricing, when price is used as a
measure of quality.
 Establish the # of units to produce,
 Calculate the fixed and variable costs and
 add a predetermined cost-popular with rapid
inflation.
 Common among retailers

• PRICE DISCOUNTING (OFF LIST PRICES)

 COMPETITIVE ORIENTED PRICING:
 Considers competitors prices primarily. Especially with
products that are homogeneous.
Can chose to be below, at or above competitors prices.
 DETERMINE A SPECIFIC PRICE:
• TRADE, given by a producer to an intermediary for performing
certain functions (in terms of % off list prices)
• QUANTITY, due to economies of purchasing large qtys.
• CASH, for prompt payment,
2/10 net 30, means 2% discount allowed if payment is made
within 10 days, entire balance is due within 30 days, no discount,
after that interest will be charged.

 A pricing method will yield a certain price, that price will • SEASONAL : purchase out of season
likely need refining.
• ALLOWANCES, : trade in allowances, price reductions granted
1. One-Price for turning in a used item when purchasing a new one-to achieve
2. Flexible / Differentiating / Discrimination Pricing desired goal. Popular in the aircraft industry. Also promotional
Policy allowances, price reduction in return for dealers promotional
efforts.