Pricing Strategy

Affordability is, in determined by two factors1.Income of consumer 2.Price of the Product & Services

Factors influencing the price • Internal Factors • Cost • Pricing Objective • External Factors • Customers • Suppliers • Competitors .

.) • Promotion as a cost factor • Credit-based transactions increase cost HLL has made sustained efforts to tap rural market by investing in an innovative distribution channel (Shakti). customized promotion (operation bharat) communication strategy.Cost Factor (Contd.

Pricing Objective (Contd..) • Profit maximization in the long run • Minimum returns on sales turnover • Deeper penetration of the market Here objective is market expansion so the company launches its product at a lower price • Keeping with competition .

Pricing Strategies • Low Price Points:HLL sells the maximum number of its products in sachet packs in rural areas. • Highlight Value . not price • Product Sharing price .Peopsodent toothpaste is available for Rs.4 • Avoid sophisticated packaging.

The deposits for 5 kg cylinder is Rs.Pricing Strategy Low Price Pricing the product at a lower price really attracts rural population for trying the products. • Tata tea introduced Samunder salt in the economy category. 350.5 is an appropriate price point to draw new customers and increase consumption. Rs. • For many FMCG companies . . • Bharat Petroleum has introduced five kg gas cylinders to reduce initial deposits and refill cost for rural consumers.

. . The rural consumer does not require Golden Eye Feature and therefore base models do not have this feature.) No frills Products The production cost can be lowered by using less sophistications and rather concentrating on sturdiness and utility of the product.. Again not all consumer need 200 channels and therefore they have provided 100 channels in the base model.Pricing Strategy (Contd. Sells a sturdy Bonus washing machine without a drier for rural market at Rs. • Maharaja Appliances Ltd. 2990/• The rural markets operate on a price value proposition LG electronics has knocked off some of the frills in the products.

• • .) Refill/Reusable Packaging By giving refill packaging marketers can add value pricing of the product..Pricing Strategy (Contd. Bournivita available in refill pack Detergent made available in reusable packaging.

• 60-90 days credit for fertilizers . etc. seeds .Pricing Strategy Credit Facilities • The credit period varies between 7-30 days in the case of fast moving consumer goods. .

.Pricing Strategy • Discounts • • • • Cash discount Quantity Discount Off season discount Promotional Schemes.

availability at village shops and use of rural specific mass media. medium quality. The success of Nirma is due to affordable price.Pricing Strategy Value Engineering This technique helps the organization not only lower cost but enhance the value Nirma detergent powder over a period of ten years has become the largest selling brand in rural India. .

001.000 Consuming class Price Conscious Rs.50.001 Life style Very Rich Value Conscious Rs.Consumer Categories Category Quality conscious Annual Income Over Rs.45000 Climbers .Rs.

Price in Marketing Mix Rural Consumers Quality conscious concerned with functional benefits value for money Value conscious Price sensitive concern with functional benefits Product Price Promotion Place Premium Product High High Show rooms. paan shops and haats . Mass Products Medium High General and fancy stores paan shops and haats Price conscious Spurious products Low No Kirana. Maals.

Companies add features to their products with a view to enhancing their customers perceived value. For each factures which enhance convince durability reliability attractiveness. • .Pricing for Quality Conscious • Pricing Methods • • • When price quality relationship are easy to associate marketer can employ the following methods of pricing Discriminatory pricing Perceived value pricing Discriminatory pricing is employed to charge different customers grouped differently projecting in quality offer.

.Pricing for value customers • • • • • • These customers are willing to pay for the product of their choice as long they get ‘value for the money’. Psychological Value Pricing Penetration Pricing Pricing for Price –Conscious Small unit low pricing Promotional pricing.

It attacks market leader Phillips by launching a radio set for Rs. . Low Priced shampoo Cavinkare realized that for a family of five members at rs.250) and grabbed a major chunk of the market.180(the Phillips radio set cost Rs.Videcon :Pricing Strategy Videcon was one of the first companies to enter the rural market with a plethora of products in the home appliances. 40 spend fro a shampoo . Many rural families cannot be afford expense.2 per sachet and minimum of four hair washes per person per month would mean a Rs.

10 and Rs. attitudes and habits As consumers in rural areas were exposed to and became familiar with such value added value for money alternatives.20 each in different sizes and combinations.s Dream Flower Talc fro rural areas. . The project was aimed at addressing issues of consumers awareness. 5 Rs. HLL provided hampers at discounted prices of Rs. a tube each of pepsodent and Fair & Lovely ad Pond.Operation Bharat: Bundle-Price Strategy HLL launched a combo pack comprising a Clinic shampoo bottle.

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