Concept and Definition of Price,

Pricing, Role and Function of

Pricing
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-KARTEEK(073)
-DINESH(075)
KARTEEK(073)
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DINESH(075)
-KAMALAJA(077)
SRAVYA(076)
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KAMALAJA(077)
-HABEEB(079)
GULSHAN(078)
HABEEB(079)
Price: Concept and Definition
Price has multiple interpretations and definitions one of it that
encompasses the concept of price is as follows:

“Price is amount of money charged for a product or service. It is the

sum of all the values that consumers give up in order to gain the
benefits of having or using a product or service”

“Price is the value placed on what is exchanged. Something of value is

exchanged for satisfaction and utility, includes tangible (functional) and
intangible (prestige) factors.”

PRICE PRICING ROLE AND FUNCTION

Price: Concept and Definition
As a concept
“Price is that which is given up in an exchange to acquire a product and
service”
“It is the only element of a generic marketing that relates to revenue all
other parameters relate to costs”

Total Revenue = Price * Quantity

Profits = Total Revenue - Total Cost

PRICE PRICING ROLE AND FUNCTION

Pricing: Price Setting; 6 Step Process
Six step process in Pricing

1
• Selecting the price objective

2
• Determining demand

3
• Estimating costs

4
• Analyzing Competitors' Costs, Prices, and Offers

5
• Selecting a pricing method

6
• Selecting the Final Price

PRICE PRICING ROLE AND FUNCTION

Pricing
Pricing is the process whereby a business sets the price at which it
will sell its products and services, and may be part of the business's
marketing plan.

A firm sets a price for the first time when

•It develops a new product
•Introduces regular product into a new distribution channel or
geographical area

PRICE PRICING ROLE AND FUNCTION

Pricing
A company must set its price in relation to the value delivered and
perceived by the customer

Company
Lower
Higher misses
Perceived
Price potential
value
profit

PRICE PRICING ROLE AND FUNCTION

Pricing
A company must set its price in relation to the value delivered and
perceived by the customer

Company fails
Lower
to harvest
Lower Price Perceived
potential
value
profit

PRICE PRICING ROLE AND FUNCTION

Price: Price Setting

These are price setting methods considering the motive of the company
“cost-based” is product driven; a summation of costs (Soaps, Daily Bread)
“Value-based” is customer perception driven (Mobile Phones, Apparel)
PRICE PRICING ROLE AND FUNCTION
Price: Role and Function
• Signal To The Buyer
• Instrument of Competition
• Improving Financial Performance
• Marketing Program Considerations

PRICE PRICING ROLE AND FUNCTION

Signal to the Buyer
• Direct way of Communication
• Basis of Comparison between brands
• Positioning the brand

High Price Positioned as high quality, Low Price product- positioned as

technologically advanced product affordable

PRICE PRICING ROLE AND FUNCTION

 Low Price product- positioned as High Price Positioned as a Luxury Car
affordable smart phone

High Price product

Low Price product

PRICE PRICING ROLE AND FUNCTION

PRICE PRICING ROLE AND FUNCTION
Instrument of Competition
• Quickly attack Competitors
• Position your business away from Direct Competition

PRICE PRICING ROLE AND FUNCTION

PRICE PRICING ROLE AND FUNCTION
PRICE PRICING ROLE AND FUNCTION
Improving Financial Performance
• Impact on Business Financial Statements
Ex:Maggi

Maggie had to face litigation . It resulted company, net loss in 2

quarters. Company launched the product with an increase of INR 2

PRICE PRICING ROLE AND FUNCTION

 Marketing Program Considerations
• Substitution for advertising and sales promotion
• Incentive to channel members

Wholesaler Retailer Customer

Company
( INR 15) (INR 18) (INR 20)

PRICE PRICING ROLE AND FUNCTION

THANK YOU

GROUP 1
-KARTEEK(073)
-DINESH(075)
-SRAVYA(076)
-KAMALAJA(077)
-GULSHAN(078)
-HABEEB(079)