MARKETING MANAGEMENT- ASSIGNMENT

ON
PRICING

SUBMITTED BY- SUBMITTED TO-

MD JEESHAN MS KAVITA KHURANA
PGDM 2 B
ABS/PGDM/19/081
Question-
Comment on factors that influence pricing decision (Elaborate using real life examples)
Solution:

There are various factors that affect the pricing policy of any organization such as:-

1. Consumer Pricing Psychology: - effect of the psychology of consumer related to the

prices that affects the buying behaviour of consumer i.e. the lower price threshold and
upper price threshold that cap the buying capacity of consumer.
for e.g.- when we go to buy a phone in market we have a set range(20,000-40,000),
then below 20,000 we don’t buy the product and above 40,000which we are not able
to buy the product.
2. Price Quality Interference: - Effect of price as quality index. For instance if a person
goes to vegetable shop then below some specific selling price of Tomato in the
market one would consider the quality of tomato to be Low quality if they are not sure
of how to check quality of the tomatos.
3. Price Endings: - Price endings would have some effect on buying behaviour as if in a
sale a product is marked as Rs.1999 only then we would consider it to be belonging to
1900 band instead of 2000 band and may end up buying them.
4. Reference price: - Reference prices are the prices that consumer set as reference or
fair price for comparison purpose for instance if we want to buy fruits then references
or the historical prices can affect our buying behaviour.
5. Demand: - Demand of a product in the market also lead to change in prices for e.g.
demand of hand sanitizers went up when there was shortage of the same in the
market.
6. Price of Competitors: Prices of Competitor also lead to change in prices as if we went
to buy a burger in Burger king, then the prices of burger would be effected due to
prevailing prices of Mc Donald’s ,The burger club and other leading brands
considering the elasticity to be relatively elastic.
7. Costs involved in production: - changes in values of types of costs such as variable
cost, fixed cost, total cost and average cost may lead to change in prices of product for
e.g. A pen with a fixed cost of Rs.4, variable cost of Rs.6. and total cost Rs.12, then
changes in labour cost may change variable cost that will lead to change in overall
cost and due to tough competition, lesser margin may lead to increase in prices to
sustain in the market.