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Pricing

Pricing

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Published by Sunil Seth Kakkad

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Categories:Types, Business/Law
Published by: Sunil Seth Kakkad on Dec 06, 2011
Copyright:Attribution Non-commercial

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05/13/2014

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Pricing
 
Is the process of determining what a company will receive in exchange for itsproducts? Pricing factors are manufacturing cost, market place, competition,market condition, and quality of product. The other three aspects areproduct, promotion, and place. Price is the only revenue generating elementamongst the four Ps, the rest being cost centers,The needs of the consumer can be converted into demand only if theconsumer has the willingness and capacity to buy the product. Thus pricing isvery important in marketing.
Questions involved in pricing
How much to charge for a product or service?How much do customers value the products, services, and other intangiblesthat the company provides?What are the pricing objectives?How to set the price? (Cost-plus pricing, demand based or value-basedpricing, rate of return pricing, or competitor indexing)What image do you want the price to convey?Do you use psychological pricing (personal perception what you feel is right),Logical pricing (fair market price based on demand & supply of the product)OrPremium pricing: prestige pricing (also known as prestige workmanship)Where once believe in reputation of the company rather than sales volume)
What a price should do
A well chosen price should do three things:Achieve the financial goals of the company (e.g., profitability)Fit the realities of the marketplace (Will customers buy at that price?)Support a product's positioning and be consistent with the other variables inthe marketing mixPrice is influenced by the type of distribution channel used, the type of promotions used, and the quality of the productPrice will usually need to be relatively high if manufacturing is expensive,distribution is exclusive, and the product is supported byextensive advertising and regular promotional campaigns.
 
Premium pricing
Premium pricing
(also called prestige pricing) is the strategy of consistentlypricing at, or near, the high end of the possible price range to help attractstatus-conscious consumers. The high pricing of premium product is used toenhance and reinforce a product's luxury image. S
 
elling a product at a highprice, is always sacrificing high sales to gain a high profit, for premiumpricing Buyer are less price-sensitive because either their need for theproduct is more than others or they understand the value of the productbetter than others. In market skimming goods are sold at higher prices soProduct will experience fewer salesPremium pricing is the practice of keeping the price of a product or serviceartificially high in order to encourage favorable perceptions among buyers,based solely on the price. The practice is intended to exploit the (notnecessarily justifiable) tendency for buyers to assume that expensive itemsenjoy an exceptional reputation or represent exceptional quality anddistinction.
Best Practice Price seller in Market
Setting the price based upon prices of the similar competitor products.Setting a price based upon analysis and research compiled from the targetedmarket.Pricing designed to have a positive psychological impact based on spendingpattern economic condition of the market, demand & supply in marketmapping the target customer rather then targeting & running after each andevery enquiry they get it.Setting a different price for the same product in different segments to themarket For example, this can be for different ages or for different openingtimes,An observation made of Market demand and business behavior in which onecompany, usually the dominant competitor among several, leads the way indetermining prices, the others soon following.

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