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Pricing Strategy
Pricing Strategy
Pricing Strategy
Pricing
Strategy
JBIMS MMM-I
Contents
Introduction
Steps in Pricing
Selecting pricing objective
Determining Demand
Estimating Costs
Analyzing competitors costs, prices and offers
Selecting a pricing method
Selecting the final price
Pricing
Strategy
Price Pricing
A
It is the strategically
monetary correct value
value of a attached to a
product product/servic
e
correspondin
g to what it
delivers
Price Quality Segments
PRICE
PRICE
PRICE
PRICE
VALUE RECIVED
Step 1
Pricing Objectives
Pricing Objectives
Profit Maximization
Maximize Quantity
Selecting
Quality Leadership Pricing
Objectives
Partial Cost Recovery
Survival
Status Quo
Step 2
Determining Demand
Price elasticity of demand
Price in Rs.
Price in Rs.
10 10
5 5
95 100 50 100
Estimating Cost
Estimating Cost
Types of Costs
Fixed Average
Variabl Total
e
Company Logo
Cost Per Unit at Different Levels of
Production
Accumulated Production
Analyzing
Competitors’ Costs,
Prices, and Offers
Analyzing Competitors’ Costs, Prices, and Offers
Selecting a Pricing
Method
Selecting a Pricing Method
Markup Pricing
Target-Return Pricing
Pricing
Perceived-Value Pricing method
s
Value Pricing
Sealed-Bid Pricing
Markup Pricing
e.g. MHADA
Target-Return Pricing
e.g. Supermarkets
Going Rate Pricing
Based on Competitor’s
Pricing
Follow the Leader
e.g. Bottled water, Soft Drink,
Toothpaste etc.
Sealed Bid Pricing
PSYCHOLOGICAL
PRICING
IMPACT OF PRICE
ON OTHER
E B GAIN & RISK
PARTIES Selecting SHARING
the Final PRICING
Price
INFLUENCE OF
COMPANY
D C OTHER MARKETING
PRICING POLICY MIX ELEMENTS
Adapting the Price
Geographical Pricing
Counter-trade
Barter Geographi
cal
Compensation Pricing
Deal
Buyback arrangement
Offset
Geographical Pricing
Offset
Offset
Buyback arrangement
Compensation Deal
Barter
Counter-trade
Price Discounts and
Allowances
1. 5.
2. 4.
Cash Allowance
3.
Discount
Quantity Seasonal
Discount Discount
Functio
nal
Discoun
Promotional Pricing
Loss-leader pricing
Special-event pricing
Cash
rebates Promotion
Low-interest financing al Pricing
Longer payment terms
Customer-
segment Time
pricing pricing
Product-
form pricing Location
Image Channel pricing
pricing pricing
Discriminatory Pricing
(continued…)
F
Segmentable &
different intensities of
demand
No resell of product
Not be illegal
Product-mix Pricing
(six situations involving product-mix
pricing)
Product-Line
Pricing Captive-
Product
Optional-Feature Pricing
Pricing
Product +
Ancillary /
Main product + Captive,
Optional products
products,
Features,
Services
Product-mix Pricing
(continued…)
Two-Part
Pricing Product-
Bundling Pricing
By-Product
Pricing
Fixed fee +
Variable
usage fee Pure
bundling &
Mixed
bundling
Initiating and
Responding to Price
Changes
Initiating Price Cuts
A
Excess plant capacity
B
Declining market share
C
Aggressive Pricing
Economic recession D
Reduction of E D Unbundling
Discounts
Initiating Price Changes
▼
Customer
s’
Reactions Competito
r’s
Reactions
Responding to competitors’ price
changes
If it
doesn’t
Try
work or if
augmentin
it is not
g the
likely to
product
work, then
meet the
price cut
head-on
Responding to Competitors’ Price
Changes
Is
Why a change Effect Response(s
temporar on Mkt ) from
change?
y/ Share / competitor
Permanen Profit s
t ?
When a Market Leader is Being Attacked on
Price
Manage
Price
A
Launch a
low-price
E B Maintain
price and
fighter Options add value
line
Available
Increase
price &
D C Reduce Price
improve
quality
Price-Reaction Program for meeting a
competitor’s price cut
LOGO