Prepared by:-Jaydip ParmarPranav GosliyaParth ShahNiraj KhatriSagar Jadav

Submitted To:-

Professor Jayrasinh Jadeja

Price

The amount of money charged for a product or

service, or the sum of the values that consumers

exchange for the benefits of having or using the

product or service.

These commodities and services are Brands … !!!For which the pricing strategies are designed

NEW

1.

Market skimming pricing

Market skimming pricingis a strategy with highinitial prices to “skim”Revenue layers from themarket.

APPLE i-PodOBJECTIVE

New product ,new market… A new way of listening to music

STRATEGYKeep the prices high, aggressive promotion

Penetration Pricing

Companies set a low price in order to attract a large number of buyers quickly and win large market share.

Example: In India Dell use penetration pricing strategy because Indian market are highly affected by the price. It increase sales as compare to HP, Sony and other competitors.

Rs.10500

Rs.14999

Rs.14249

Competitive pricingIn competitive pricing, a seller regularly offers

products priced as low as possible and accompanied by a minimum of services.

Product Mix Pricing Strategies

• Product line pricing• Optional product pricing• Captive product pricing• By-product pricing• Product bundle pricing

2.

Product line pricing

Product line pricing takes intoaccount the cost differencesbetween products in the line,customer evaluation of theirfeatures, and competitors,prices.

For example, Bata offers entirerange of footwear in India fromRs. 749 to Rs. 2499. It includechildren’s section shoes toordinary leather shoes.

Rs. 749

Rs. 2499

Optional product pricingOptional product pricing

takes into account optional

or accessory products along

with the main product.

For example, A car buyer

have a choice to order a

music system, GPS

navigation system or not to

order such high quality and

simply buy car.

Captive product pricing

Captive product pricinginvolves products that must beused along with the mainproduct.

For example, blades for a razor Two-part pricing is where theprice is broken into: Fixed fee -- Razor priceVariable usage fee -- Blades price Gillette Mach3 razor price Rs.150

and 8 Blade for Rs. 427

By-product pricing

By-product pricing refers to products with little or no value produced as a result of the main product. Producers will seek little or no profit other than the cost to cover storage and delivery.

For example, wastage of the products turn into profit making products through converting wastage into using product. e.g. Papermaker company.

Product bundle pricing

Combining two or more products and offering the bundle at a low or reduced price.

For example,

Price Adjustment Strategies

• Discount pricing• Segmented pricing• Psychological pricing• Promotional pricing• Geographical pricing• Dynamic pricing• International pricing

3.

Discount pricingEarly payment of bill, volume purchase, off season buying orPromoting the

product.

Cash disc.“2/10, net 30’’

Segmented pricing

It is used when a company sells a

product at two or more prices even

Though the difference is not based

on cost.

Customer segment pricing– e.g. Museum

Product form segment pricing –mineral water bottle

Location pricing – e.g. Theaters

Silver - Rs.150, Golden- Rs.200, Platinium- Rs.250

1-liter bottle cost Rs.155-liter bottle cost Rs.60

Psychological pricing

It occurs when sellersconsider the psychologyof prices and not simplythe economics.

Reference prices arePrices that buyers carryin their minds and referto when looking at agiven product.

Promotional pricing

Companies will temporarilyprice their products belowList price and sometimeseven below cost to createBuying excitement andincrease demand.

-Loss leaders pricing - Special event pricing-Cash rebates pricing - Low interest financing,longer warrantees, and free maintenance

Promotional pricing

It is used setting prices for customers located in differentparts of the country or the world• Free On Board pricing• Uniformed delivery pricing• Zone pricing• Basing point pricing

Geographical pricing

Dynamic pricing

Adjusting prices continually to meet the characteristics

and needs of the individual customer and situations.

International pricingCompany should charge pricing in a specific

countryAfter showing many factors like Economic

conditions,Competitive conditions, Laws and regulations

etc.They can set their pricing. A Mc Donald’s Big Mac

costs $3.57 in U.S., $7.80 in Norway, $1.62 in India.

Price Changes

Initiating Pricing Changes

Price cuts is a reduction in price• Excess capacity• Increase market share

Price increases is an increase in selling price

• Cost inflation• Increased demand and lack of supply

4.

Buyer Reactions to Pricing Changes

• Price cuts• New models will be available• Models are not selling well• Quality issues

• Price increases• Product is “hot”• Company greed

Responding to Price Changes

Questions• Why did the competitor change the price?• Is the price cut permanent or temporary?• What is the effect on market share and

profits?• Will competitors respond?

Responding to Price Changes

Solutions• Reduce price to match competition• Maintain price but raise the perceived

value through communications• Improve quality and increase price• Launch a lower-price “fighting brand”