Successful marketers do not leave the pricing decision to the cost accountants.

And therein lies their success secret.

- Ambi Parameswaran, Does Price depends on Cost? Livemint 12th July 2016

The deep-discount model followed by e-tailers is unsustainable:

Kumar Mangalam Birla, ET, 13th July 2015

Pricing, Place & Prm Strategy

SUAS-MBASem2-Batch21-23-SMM
Strategic Marketing Management
Unit-III
March 2022

Text Reference:
Chapter 16, Developing Pricing Strategies & Programs, MM 15th Ed. by Kotler-Keller, Pearson
 Learning Objectives

1. Understanding Pricing and Pricing Psychology

2. EDLP, Promotional and Differentiated Pricing, Discounts and allowances
3. Initiating & Responding to Price changes
4. Place: Omnichannel Challenges
5. Promotion: IMC Mix & Changes
 Understanding Pricing

• Pricing in a Digital World

Buyers: Format Example

✓Get instant vendor price comparisons Sampling Free

& Survey Platforms
✓ Check prices at the point of purchase
Limited Books,
✓ Name your price and have it met
Preview Movies
✓ Get products free
Freeware Whatsapp,
Sellers: Adobe
✓ Monitor customer behavior & tailor offers FreeMium Spotify
Linked In
✓ Give customers access to special prices
Free to Youtube
✓ Negotiate prices online or even in person Fee
 Understanding Pricing

• A Changing Pricing Environment

• Millenials & GenZ

• ‘Access to Assets’
not Ownership
• Buy & Sell too!
• Believe in
• Shared Economy
• Bartering
• Renting
 Understanding Pricing

• How companies price

• Small companies: boss
• Large companies: division/product line managers
• How companies should price
• Understanding of consumer psychology (on prices)
• Price Makers NOT Price Takers
• A systematic approach to setting, adapting and changing prices
• Following a Methodology for Pricing
• Cost Plus & Mark-Up, Target Return, Value, Perceived Value, Going Rate
• Value Pricing- EDLP (Deep Discounts)- Walmart, IKEA, Target, SouthWest
 Promotional Pricing

• Loss-leader pricing • Low-interest financing

• Special event pricing • Longer payment terms
• Special customer pricing • Warranties/service contracts
• Cash rebates • Psychological discounting
 Dis. Meaning
Differentiated Pricing Deg.
1 Demand Intensity
2 Volume Levels

• Price discrimination & Differentiated Pricing 3 Consumer Groups

4 Individuals
Customer- Product-form
segment pricing
pricing Bisleri

Time pricing Image pricing

Channel
Location pricing
pricing
 Distribution Management: Basics

• Multichannel Marketing
• Using two or more marketing channels to reach
customer segments in one market area
• Omnichannel Marketing
• Multiple channels work seamlessly together to
serve customers online, in-store or a hybrid
arrangement
• Advantages:
• Increased Market Coverage
• Lower Channel Cost
• More Customized Selling
• Integrated Marketing Channel System

Patanjali Ayurvedic Stores, MomNPop Stores, Organised Retailers, Etailers, Website, OrderMe App
Example of a Hybrid Marketing Channel
Multi-Channel: The Hybrid Grid
 Marketing Mix
Price

• Product
• Price Offer Mix Customer
Value
• Place Triad
Quality Service

• Promotion Promotion Mix

Advertising
Sales Promotion
Events & Experiences
PR & Publicity
Online and Social Media Marketing
Mobile Marketing
Direct Marketing- DBMS
Personal Selling
Common IMC Platforms