CAP-1

1. What are the different pricing strategies used by companies? For any 2 strategies, give
examples of how brands use them?
- There are mainly 4 pricing strategies:
o Premium pricing: In this strategy, the product has strong competitive edge in the
market and people are willing to pay high premium for the product.
o Penetration Pricing: Pricing is set artificially low to make an entry into the market
when the product is launched new.
o Economy/Competitive Pricing: The price is kept low to have competitive advantage
with respect to competition
o Skimming Strategy: High price is charged initially when the product is unique and has
low competition and the price is lowered as more competition arrives
Examples:
o Premium pricing:
 Cars like Rolls Royce sell at high prices due to the social prestige associated
with it. Here, the high value of Rolls Royce is a hallmark of Rolls Royce and
lowering the price will ruin the brand image of Rolls Royce
 Intel premium pricing: Intel takes advantage of its advancement in
technology over all other CPU manufacturers to keep the prices of intel
CPUs at a significant premium to its rivals.
o Penetration pricing:
 JIO entered Indian market of mobile network by a highly penetrative pricing.
Initially, JIO gave away its services for free for about a year as pilot testing
and then kept a very low price after the testing period to capture the market
share
 Cab hailing companies Uber & Ola also launched a penetrative pricing
campaign in their initial stages of launch whereby the prices were kept far
below that of the alternatives – the autorikshaw or other local cabs.

2. What are the different types of segmentation?

- There are mainly 4 types of market segmentations:
o Demographic segmentation- this is the most commonly used segmentation whereby
statistical data about a group of people or companies are used. In case of people,
the main attributes are:
 Age
 Gender
 Income
 Location
 Ethnicity
 Annual income
 Education level

In case of companies, the main attributes are:

 Company size
  Industry type
 Job function
o Psychographic segmentation: This is slightly more difficult than demographic as it is
subjective and needs research to uncover and understand the data. Some of the
psychographic segmentation examples are:
 Personality traits
 Values
 Attitudes
 Interests
 Lifestyles
 Psychological influences
 Subconscious and conscious beliefs
 Motivations
 Priorities
o Behavioural segmentation: Behavioural segmentation requires that you know about
your client’s actions. These activities relate to how a customer may interacts with
your brand or to other activities that happen away from your brand. Some of the
examples are:
 Purchasing habits
 Spending habits
 User status
 Brand interactions
o Geographical segmentation: It is the simplest type of segmentation. It categorises
customers based on geographic borders. Some of the examples:
 ZIP code
 City
 Country
 Radius around a certain location
 Climate
 Urban or rural
3. What is the difference between intensive, selective and exclusive distribution? Give 1
example of each.
- Different types of distribution are Intensive, selective and exclusive distribution
o Intensive distribution: It provides saturation coverage of a product at all outlets. This
is where a product has many substitutes and people will simply buy another product
if a product is unavailable. Eg: Cold drinks
o Selective distribution: In this type of distribution, the company has only selected few
stores in a geographical location that sells its products. This helps is maintaining
better control on services and quality. Eg: Consumer durable items like refrigerators
or TV
o Exclusive distribution: In this type of distribution there are only one exclusive retailer
chain or distributer to sell the products in specific geographic area. This is mainly
used in premium segment where special service and tight quality control is required.
Eg: Luxury cars like Rolls Royce or Premium electronics gadgets like iPhones

4. Explain Nescafé’s marketing mix

- Nescafe is a brand of instant coffee owned by “Nestle”. The main marketing mix of Nesxafe
are the Products, Promotion, Pricing and Place which are as follows:
- Products:
o Nescafe brands have a number of products in the instant coffee category. Some of
the products are:
 Nescafe Classic
 Nescafe Gold
 Nescafe Cappuccino
 Nescafe Premium’
 Nescafe Espresso
 Nescafe gold blend
 Nescafe chilled latte
 Nescafe sunrise
 Nescafe Sunrise Extra

These products cater to different tastes as well as different price segments.

- Promotion:
o Nestle runs a number of advertisement campaigns appealing on various aspects like
emotions, wit etc aimed at making Nescafe a household brand. This continuous
promotion has given Nestle a massive hold of the market in the instant coffee
segment. Most of Nestle’s promotion involve:
 Advertising campaign
 Newspaper advertisement
 Internet & Social media advertisement
 Television advertisement
 Public relations activity
- Pricing:
o Nescafe was initially a premium instant coffee brand having high pricing. However,
over time, Nescafe has brought out several products catering to different pricing
segment. Products like Nescafe sunrise extra having 53% coffee and 47% chicory mis
is brought in to reduce price. High end segments are offered special flavours in
Nescafe Gold products. Nescafe also has several sizes of packs in which it sells coffee
powder
- Place:
o Nescafe has become a household product and hence Nescafe has a strong
distribution network which is mostly intensive in nature with deep presence across
length and breadth of the country. Nescafe offers generous margins to its
distributors and retailers for premium segments to ensure their sales.