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Section 3
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i dost based Pricing:

i Adding a standard markup to the cost of the
product.
i Value Based Pricing: It uses buyers
perception of value rather than on the seller cost.
The targeted value and price then drive decisions
about product design and what cost can be
incurred.
i dompetition based pricing:
i Setting prices based on the prices that competitors charge
for similar product.
The smaller firms follow the leader.They change their prices
When market leader change the prices rather than when their
own demand and cost change.
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i Internal Factors:
i Marketing Objective:dompany should
consider its target market, positioning strategy,
i and marketing mix strategy .
i Marketing Mix Strategy:
i Price decision must be coordinated with product
design,distribution,and promotional decision.
i dost:dost set the floor for the price that company can
charge.Price should cover all cost for
producing,distributing and selling the product.

i External factors:
i Market and Demand
i dompetitors dost.
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i Market Skimming Pricing: Setting high

prices for a new product to skim maximum profit
from the segments willing to pay higher prices.
i Product quality should confirm the price.
i Product image should support its pricing.
i It should be difficult for the competitor to enter and
offer low prices.
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i Setting a low price for a new product to penetrate

the market deeply and quickly, to attract large
number of customers and to attain larger market
share.
i Market should be highly price sensitive to respond
to low price product.
i Production and distribution cost must fall as sales
increases.
i Low prices must keep out competitors from ntering.
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i Product Line Pricing:

i Setting varied price levels of different products in a
line according to their cost, different features
offered in each product and keeping in view
competitors pricing.
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i The pricing of optional or accessory

products along with a main product.
i E.g.Offering ice makers with
refrigerator.
i To choose whether to include prices of
these items as options or include in
the base price.
 
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i Setting a price for products that must

be used along with a main product e.g
blades for a razor.
i By Product Pricing
i Setting a prices of by product that come out
as a processing of main product.

i Product Bundle Pricing

i dombining several products and offering
bundle pricing at a reduced prices.e.g
Makro.
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i Discount and Allowance Pricing:

i A straight reduction in price on
purchases during a stated period of
time.
i dash Discount
i Trade Discount.
i Seasonal Discount
i Allowances:
i Allowances are another type of reduction
from the list price given to retailers.
i Trade In allowances:
i Price reduction given for turning an old item
when buying new one.

i Promotional allowances:
i Payments or price reduction offered to
dealers to reward for participating in
promotional program.
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i Adjusting basic prices to allow for

differences in customers,products,and
location.
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i A pricing approach that consider

psychology of prices.

i Promotional Pricing:
i Temporary pricing products below the
list price or below cost to increase
sales.
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i Deciding about prices for customers

located in different parts of country or
world.
i FOB
i Uniform Delivery
i Zone
i Basing point
i Freight Absorption
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i Setting prices internationally.

i It depends on economic
conditions,competitive situation,laws
and regulation, and development of
wholesaling and retailing system.
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i Initiating Price duts:

i do. May cut to boost sales.
i Price change took place if dompany faces
tough price competition and its market
share is falling.
i Initiating Price Increase:
i Major factor in price increase is cost inflation.
Rising cost squeeze profit margin and company
passes cost increase to customers.
i dompany can increase their prices invisibly by
dropping discounts or adding high price units to
the line.
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i Buyers can doubt about quality of

product in case of price cuts.
i In Price increase buyer can reject the
increase altogether .
i dompetitors while changing prices should
consider the following
i Loosing market share in case of price
increase.
i Effect of price change in long run sales.
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i Pricing Within dhannels:Federal

legislation in US on price fixing states
that seller must set prices without
talking to competitors.
i Sellers are also prohibited from using
predatory prices i.e selling below cost .