DrAnubha Gupta Faculty SS in Commerce Vikram University Useful for BBAHBCOMHMCOM and allied subject Concept of Pricing Price is one of the most important variable in the marketing mix pricing respond quantity as money which can received by manufactures on behalf of good an ID: 1027713
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1. PRICING - DECISION AND STRATEGIES Dr.Anubha GuptaFaculty , S.S. in Commerce Vikram UniversityUseful for BBA(H)/B.COM(H)/M.COM and allied subject
2. Concept of PricingPrice is one of the most important variable in the marketing mix pricing respond quantity as money which can received by manufactures on behalf of good and services provided to consumer , for manufactures it is income but for consumer it is expenses.
3. Concept of pricing
4. Objective of price
5. Importance of priceIt is importance function of marketing managementMeasure & comparison of valueEffect on sales promotion measureControl of economic progressEffect on marketing programmeCriteria of evaluation
6. Importance of priceSituations when pricing decisions assume more importance :1.When the company determines price for the first time2.When the situation compel a company to initiate price change 3.When the price change is initiated by competitor4.When the cost and demand of product is closely interrelated
7. Factor influencing pricing decisions
8. Types of price policies
9. Types of price policies(A) flexibility basis: 1.one price policy 2.flexible price policy
10. Types of price policies(B)Price level basis:1.competition & meeting policy2.under or above the market price policy
11. Types of price policies(C) specialty basis:1.bait pricing policy2.price line policy3.full product line price policy4.skimming price policy5.follow the leader price policy6.market penetration price policy7.loss leader pricing policy8.unit pricing policy9.psychological pricing policy
12. Types of price policies(D) geographical basis:1.Factory price policy2.Freight absorption pricing policy3.Zonal delivery pricing policy4.Uniform delivery pricing policy
13. Pricing strategiesCost + Pricing :Useful for manufacturers, wholesalers and retailers.Under it, management works out the cost of goods manufactured or purchased for resale and adds a percentage of profits to it – to determine the selling price.
14. Pricing strategiesBelow Cost Pricing:Useful for obsolete goodsIt is sometimes desirable to sell the goods at a price less than the cost. This method is used to sell perishable goods to save the firm from excessive losses due to deterioration in quality with the passage of time.
15. Pricing strategiesCompetition-Oriented Pricing:Useful for manufacturers when:The market is highly competitive, The product of one manufacturer is not significantly differentiated from those of others.As such, under competition-oriented pricing strategy, same price is fixed by all competitive producers.
16. Pricing strategiesFollow the Leader Pricing:Under this policy, one firm i.e. the price leader with dominant market share sets the price; and other firms in the industry follow that price. Followers match price cuts or price rises, as initiated by the leader. Some firms, however, may match price cuts but not price rises initiated by the leader; when recessionary conditions prevail in the market.Or some firms may match price rise but not price-cuts initiated by the leader; when boom conditions prevail in the market.
17. Pricing strategiesPenetration Pricing:Useful for manufacturers for introducing a new product by them. A manufacturer sets a low price for his product; so as to penetrate into a new market for popularizing his product; and capture a large market share over a period of time, by establishing goodwill as ‘low-price seller’.
18. Pricing strategiesSkimming the Cream Pricing:It is useful for specialty products; i.e. luxurious items in which case rich consumers may not mind paying high prices due to their ego, status, or prestige.It is just opposite to penetration pricing.Under this strategy, a manufacturer sets a very high initial price for his product; as so to make maximum profits.It is useful under conditions of rapidly advancing competition; so that by the time, competitors gain ground, the particular manufacturer in question can withdraw from the market or reduce price suitably-having already made much profits.
19. Pricing strategiesDiscriminating Pricing:It is useful for professional services e.g. CA ,doctor’s or lawyer’s; who may charge different fee from different customers, on the basis of their ability to pay.It is possible when customers are separated from each other, on the basis of their (market) location. For example, such kind of price discrimination is found in case of seating in cinema halls, in railway services etc.
20. Pricing strategies Loss-Leader Pricing:It is useful for retailers. They sharply cut prices on one or few popular items (even below its cost) to attract customers. The items on which prices are cut are called loss leaders.Having attracted in this way; they may charge very high prices for some of their other products; which consumers may pay thinking that the price is just reasonable.In fact under this pricing strategy, loss suffered in case of ‘loss-leader-product’; is compensated through higher prices charged for other products.
21. Pricing strategiesKeep Out Pricing:It can be adopted only by big firms who have large resources at their command.It is a pre-emotive pricing policy involving fixation of low prices to discourage or prevent the entry of new firms into the industry.
22. Pricing strategiesPsychological Pricing:It is useful for retailers.Under psychological pricing strategy, price is so fixed that it appears to be somewhat lesser; and influences the mind of the buyer to buy the product. For example, a price fixed at Rs. 199 instead of straightway Rs. 200 is an instance of psychological pricing strategy.
23. Pricing strategiesDifferential Pricing for Product-Life-Cycle Stages:Under this pricing strategy, the manufacturer has different price policies in view of the product- life cycle stage a product is passing though. For example, a manufacturer may fix a low price when the product is in the introduction stage; may slightly raise the price during the growth stage; may stabilize the price at the saturation stage and may finally reduce the price when the product is passing through the declining stage.
24. Product price decision process
25. References:www. Yourarticlelibrary.comwww.google.com
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