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Pricing AmitK
Pricing AmitK
Pricing AmitK
Pricing:
Fundamentals Practical Applications
03 Earn more from same consumer 04 Keep tomorrow in mind even while
working for today
Amit K.
We need to understand other processes and their impact on cost, other Look beyond to solve marketing problems, which includes cost as well. Liscious Egg
than brand imagery packaging is costlier to save cost.
Margin Levers
Question
02
MRP COST
Are they the same (can use
any)? Can we use them
Practical Applications
randomly?
Used basis situation. Can you give examples when to use which one.
Purpose of Pricing Monitor & maintain Profits
Absolute % Margin
Upstocking consumers Encouraging trials
Absolute profitability which impacts Gross margin management as
the organisation’s revenue, a percentage of sales value
Portfolio Management Strengthen a new launch EBITDA, share prices, etc per unit
What if these organisations started selling at much lower MRP with good
margin? It would be ‘more affordable’. Is ‘affordability’ a concern here? Will
Company would be getting higher absolute revenue from the 1st pack even the pricing strategy similar to, say Oppo, Maruti and Pantaloons?
though it is low on %margin
Brand Perception, not absolute MRP
Brand Image & Pricing (MRP)
Premium = MRP?
Brand like Jio, D Mart, want to Brands like apple, BMW don’t
be known as ‘sabse sasta’ or want to be seen as ‘low priced’
the lowest priced brand.
Premiumness is NOT a function of absolute MRP. A residential apartment
priced at Rs.10Lac is economical whereas a matchbox priced at Rs500 is
too costly. Note: We are NOT talking about the product performance. Assume it’s the
best in all examples above.
Follow the NPD process to increase the MRP / command Premiumness Consumers don’t want to spend more money in such categories.
Maintain MRP:popular price points Minimise Loss / Cost Control
Example, mineral water ● New Launch at loss to encourage trials / new market
bottles, flexi packs, reduction penetration / distribution.
in glass bottles ● Trial promotions
In such cases the objective is to minimise loss by savings on all costs
Logistics / Operations Design changes for optimum performance product and keep the loss within the budget.
03 04
Example, Glucose biscuits, Swiggy, Example, biscuit stencil / dye,
Uber, etc
Tata Tea Gold Price Comparisons Portfolio Mgt: Consumers behind the pack
a. Rs529/16 = Rs33.06
b. Rs895/24 = Rs37.29
Upgrade
Strategy
Q: What is consumer upgrade strategy and
what’s the role of pricing in that?
Consumer Upgrade: Tata Salt Consumer Upgrade: Maruti
Super
Lite
Ertiga
Lite Swift
Price and performance increases up the pyramid Consumers looking for different features and willing to pay a suitable price
for it.
Category iPhone 11
iPhone 5
Static Hierarchy
FutureFocused
Keep tomorrow in mind even
Products are static. while working for today
Consumers may
choose different
performance at
different times
04
Future Focused
Anticipate future and start working backwards. We don’t know:
“We are currently preparing students for
● What will be the future of ‘retail’ in fmcg?
jobs that don’t yet exist … using
technologies that haven’t been invented ● Future public and commercial transport?
… in order to solve problems we don’t ● Future of advertising?
even know are problems yet.”
● Future of mobile technology?