Presented byNAWNIT KUMAR(266) RAVI AGARWAL(317) SANA ULLAH SHARIFF(156)

Pricing
Pricing is the amount of money which is charged from

the customer in order to offer the product.

MONEY

MARKETER

CUSTOMER

PRODUCT

Six step of pricing

Selecting pricing objective
Determining demand Estimating cost Analyzing competitors cost , price, and offer Selecting a pricing method

Selecting the final price

1.Selecting pricing objective

The company first decide the objective 1. Survival(short run objective). 2. Maximum current profit. 3. Maximum market share. 4. Maximum market skimming. 5. Product quality leadership.

2.Determining demand
In normal, higher the price lower the demand and vice- versa. To measure the demand, we use1. Survey. 2. Price experiment- Charge different price for same product to see how change affects sale. 3. Statistical analysis- Marketer interprets and find relationships from past price and other factors.

3. Estimating costs
The company wants to charge a price that covers its cost of producing, distributing and selling the product, including fair return for its effort and risk. Total cost= fixed cost + variable cost Average cost= total cost production

4. Analyzing competitors cost, price and offers

Firm should consider the nearest competitors price and offers. If a firm give offers which is not given by nearest competitors then firm sell more product, i.e. a plus point for any firm.

5. Selecting pricing method

Markup pricing - It is based on setting the price of product by keeping in mind cost of production. Unit cost + X = Price X= Profit per unit Suppose a pen manufacture has variable cost per unit Rs 10, fixed cost Rs 500000 and production in year is 50000. producer want 20% profit on sale. What will be price. Unit cost= VC+ FC = 10 + 500000 = Rs 20 Unit sale 50000 Price = 20 + 20 of 20% = 20 + 4 = Rs 24 is a pen price

 Going rate pricing

Price is set exactly same as a competitors. Example-In oligopolistic industries price is more or less same. A small firm follow the price of leader, if leader change the price then follower also change a price.

6. Selecting the final price

At last company select a final price of product.

Pricing strategies
Different situation require different approaches towards setting up the price of product. 1) New product pricing (a)skimming product- It only applicable for innovative product. It enter in market at a high price then cover the all market step wise step down the price. (b)penetration product- Marketer set lower price to cover all the market because competitor are more. Ex- chocolate, food stuffs, household goods, etc.

2) Geographical pricing Company decides how to price its product to different customer in different location. Uniform price- same price is charge every customer. Differential price- charging different price from different customer group because they are located different geographical area, i.e. charging more price from those who are located remote area because of additional transportation cost. 3) Promotional pricing- price is set for increasing the sale of product for short period of time. ex- offering discount for certain period of time.

4) Psychological price When customers are unaware about the product qualities then marketer set higher price so that customer think product qualities is high.

Pricing strategies of Nokia

Products according to the market segmentation
Top Segment ----------Classy Product

Middle Segment--------Best Alternative

Low End Segment-----High Tech Product @ Low Price

Examples of Price skimming

NOKIA 8250 NOKIA 6600 NOKIA 9500 Communicator

Rs 18000

Rs 42000

Rs 21000-22000

Rs 24000

Rs15000-16000

Rs 10500

Rs 8000-10000

Rs 26000

Rs 9000-10000