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ASSIGNMENT OF MARKETING

PRICING IN THE CAR INDUSTRY

Bikash Dash
PRICE
High Medium Low

Premium High value Super value


BMW 3 Series 320d Chevrolet Captiva 2.0 Tata safari 4/2 Ex Di
Highline Sedan VCDie COR 2.2 VTT
(Rs.-26,70,000) (Rs.-19,01,970) (Rs.-9,20,153)
A1-Yes A2-Yes A1- Yes A2-Yes A1-Yes A2-Yes
Hig
A3- Yes A3-Yes A3-No B1-11.4
h
B1-14.9 B1-Not Available B2- 2179
B2-1995 (NA) B2-1991 B3-140@4000
B3 -70@4000 B3- 150@4000 B4- 320@1700
B4- 340@1750 B4- 320@2000 B5- manual
Q B5- automatic B5- manual

U M Over charging Medium value Good value


Skoda Superb 2.5 Tdi Honda Civic 1.8 EMT Ford Fiesta 1.4 Exi
A e (Rs.-23,30,462) (Rs.-11,54,800) TDCi
A1-Yes A2-Yes A1 Yes A2-Yes A3- (Rs.-7,44,999)
L d A3-Yes B1-9.1 Yes B1-10.6 A1-Yes A2-Yes
B2-2496 B2-1799 A3- No B1-14.9
I i B3-164@4000 B3-132@6300 B2-1399
T u
B4-350@3000
B5-automatic
B4-172@4300
B5 Manual
B3- 68@4000
B4-160@2000
Y m B5- Manual
Rip off False economy Economy
Mercedes Benz C- Fiat 500 lounge Maruti Suzuki Gypsy
Class 200k Elegance (Rs.-15,19,500) KING HT-BS III
Low AT A1-Yes A2-Yes (Rs.-5,60,163)
(Rs.-28,84,120) A3-Yes A1-No A2-No A3-No
A1- Yes A2 Yes B1-NA B1- 11.1
A3- Yes B2- 1248 B2-1298
B1-7.9 B2-1796 B3-76@4000 B3- 80@6000
B3-178@5600 B4-130@3000 B4- 103@4500
B4-240@3500 B5-manual B5- manual
B5- automatic
Note :
A. Feature
A1-power windows
A2-Power Steering
A3-Powe Anti-lock Braking System

B. Space
B1-Mileage overall (km/lt)
B2-Displacement (cc)
B3-Power (PS@rpm)
B4-Torque
B5-Transmission type

Price segments are 1.Higher- 20 lakhs- 30 lakhs


2. Medium- 10 lakhs- 20 lakhs
3. Low- Below 10 lakhs
How competitor reacts when price is changed?

When a company changes its price following questions arises in the mind
of competitor-

 Why the price has been changed?


 Whether it would be temporary or permanent?
 How the change in price will affect market share and profit?
 How other companies will respond?
 Will they maintain price?
 Will they reduce price?
 Will they increase the price?

Here we are assuming us the producer of Honda Civic 1.8EMT having


medium value strategy. We can change our price in two ways
1. By increasing our price and
2. By decreasing our price
1. When Price Increases:

Suppose we are increasing our price to Rs.-13, 58,500.

Competitors at Premium have the main objective to earn more profit by


providing optimum quality and charging high price. Now
 It may increase price and at the same time increase quality provider.
 Or it may increase the quality at the same price because its price is
already much higher than of us.
 Or change its strategy

Competitors at High value may wait to see whether this change in price is
temporary or permanent. Its main objective is to penetrate in the market.
 Now to maintain its market share it would obviously have to add few
more features.
 Or it may change its strategy.

Competitors at Super value may also wait to see the result of this change
and if the strategy of our company goes well they can increase their price
too

For Over Charging, False Economy and Rip-off there would not be any
option other than to increase the quality by adding more features and
space or to decrease the price (which they would rarely do).

Now for Good value and Economy it would be the golden opportunity to
enhance the quality of their product and charge a higher price as they
already have the reach to lower middle class family.

2. When price decreases:

Suppose we are decreasing our price to Rs.-10, 40,990 whatever the


reason be either excess production or decreasing product quality.
Now for Premium and High value strategy holders they would not treat it
as a threat to their sale because they already have high brand image for
their quality product

For Over Charging and Rip-off they would definitely face a threat in their
market share exempting it from their brand loyal customer.

Super value, Good value and False Economy strategy holders would face
the real heat of this price reduction and have to compete with adopting
some new strategy

A large number of people can go for our product leaving the Economy
one and help us to increase our market share.

……………………….