QUESTIONNAIRE  How do consumers process and evaluate prices?  How should a company set prices initially for products or services?  How should a company adapt prices to meet varying circumstances and opportunities?  When should a company initiate a price change?  How should a company respond to a competitor’s price challenge? .

Eg: Cello gel pen – Rs 10 Here the product is pen and it can be exchanged by giving a sum of 10 rupees . usually expressed in money.PRICE  Price is the exchange value of a product or service.

Possible Consumer Reference Prices  “Fair price.Potential market price”  Typical price-Average  Last price paid  Upper-bound priceGreater than or equal to  Lower-bound price  Competitor prices  Expected future price  Usual discounted price .

: Bajaj Discover and Splendor Strategies:  Odd number discount perceptions  Even number value perceptions  Ending prices with 0 or 5 .g.Price Cues “A price cue is defined as any marketing tactic used to persuade customers that prices offer good value compared to competitors’ prices. E.

When to Use Price Cues  Customers purchase item infrequently  Customers are new  Product designs vary over time  Prices vary seasonally  Quality or sizes vary across stores .

Steps in Setting Price  Select the price objective  Determine demand  Estimate costs  Analyze competitor price mix  Select pricing method  Select final price .

Step 1: Selecting the Pricing Objective     Survival – All FMCG Maximum current profit .Nokia Maximum market skimming – Sony high previously  Product-quality leadership – Apple iPod .Samsung Maximum market share .

measure of responsiveness of the quantity of a good or service demanded to changes in its price .consciousness of the customers to cost windows or range within which they make dealings  Estimate demand curves  Price elasticity of demand.Step 2: Determining Demand  Price sensitivity.

production. research and design over entire life cycle.Step 3: Estimating Costs  Types of costs  Accumulated production  Activity-based cost accounting  Target costing – Cost reduction tool using engineering . .

Land  Variable costs.Cost Terms and Production  Fixed costs.Raw materials  Total costs  Average cost  Cost at different levels of production .

: Hindu against Times of India .STEP 4 : ANALYZING COMPETITORS COST PRICE AND OFFERS •Considering the nearest competitor price.Soft drinks •Adding value to competitor price •Inform the unique features to the customer and offering for a value E.g.

Bargaining  Value pricing  Going-rate pricing.Step 5: Selecting a Pricing Method  Markup pricing – extra price from cost  Target-return pricing  Perceived-value pricing .Based on competitor price  Auction-type pricing .Biding .

Step 6: Selecting the Final Price  Impact of other marketing activities  Company pricing policies  Gain-and-risk sharing pricing  Impact of price on other parties .

Price-Adaptation Strategies  Geographical pricing  Discounts/allowances  Promotional pricing  Differentiated pricing .

Automobiles . Deccan Chronicle Attract customers Rebuild the brand E.PRICE CHANGES. Hamam Minimum Target return Year end sale.g.g.Decreasing Prices  Excess Plant Capacity  To popularize the brand     E.

Increasing Prices  Over demand E. : Petrol in India  Escalator clauses – Government Tax  Inflation due to natural calamities  Reduction of discounts – OFF sale .g.

Brand Leader Responses to Competitive Price Cuts  Maintain price  Maintain price and add value  Reduce price  Increase price and improve quality  Launch a low-price fighter line .

THANK YOU regards Deepak vallal .

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