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Pricing policies

Module 2

Pricing objectives

Market penetration objective


Market skimming objective
Target rate of return objective
Price stabilization objective
Meet or follow competition objective
Market share objective
Profit maximization objective
Cash flow objective
Product line promotion objective
Survival objective

Pricing process

Pricing strategies

Geographical
Pricing
Adjusting an items sale price based
on the buyer's location
Companies will try to gain maximum
revenue in the markets in which it
operates
Petrol prices in different cities of India ???
Srinagar
Chennai
Hyderabad
Trivananthapuram
Bengaluru
Mumbai
Pondichery
Chandigarh

Promotional pricing
Promotional pricing is a sales
and marketing technique
reducing the price of a product
or service to attract customers

Discriminatory pricing

sales of identical goods or services transacted at


differentpricesfrom the same provider
chargescustomers different prices for the same product or
service
1. Age based pricing such as charging less for a child's
ticket to a movie theatre/amusement park than an
adult.
2. Universities charging more for out-of-state residents.
3. A doctor charging for services based on patients
income.

Value Pricing
offering a product at a fair and
reasonable price that makes sense to the
purchasing customer.As the name itself
suggest price of the product/ service is set
according to value perceived by the
customer

Captive Product Pricing


The pricing of supplies, such as razor
blades, staples or computer software,
which cannot be used without a
companion product

Product Bundle
Pricing
combining several products and offering the bundle
at a reduced price
Walmarts Xbox 360 Super Elite 250GB Bundle,
for example, includes an Xbox 360 console, Final
Fantasy XIII, an Xbox 360 250GB hard drive, 2 Xbox
360 wireless controllers, an Xbox 360 wired headset,
an Ethernet cable, a standard definition Xbox 360
composite A/V/ cable, and a Final Fantasy face
plate.This package sells at a price of $399.This
saves the customer roughly $35 compared to if
these items were purchased individually.

Psychological Pricing
a little less than a round number,
e.g. $19.99 or 2.98 or Rs.1999/only

Product Line Pricing


a pricing strategy that uses one
product with various class
distinctions.

Optional Product Pricing


Amethod of determiningproduct
costswhereby abusiness setsalow
costfor its mostbasic productand
thenprofitsfromselling more costly
accessories.
Optional product pricing is especially notable in
themarketingofproducts like computer printersthat
often have a verylowinitialentry price, while
thecostof accessories like AC adaptors and printer
ink cartridges issubstantial.

Premium Pricing
keeping the price of a product or
service artificially high in order to
encourage favorable perceptions
among buyers, based solely on the
price

A luxury flat

Penetration Pricing
A relatively low initial entry price,
often lower than the eventual market
price, to attract new customers. The
strategy works on the expectation
that customers will switch to the
newbrand because of the lower price

Economy Pricing
Avaluation techniquewhichassignsalow
priceto selectedproducts. Economy pricing
is widely used in the retailfood businessfor
groceries such as canned and frozen
goodssold under generic foodbrands
where
marketing andproduction costs
have been kept to a minimum

Price Skimming
when a marketer sets a relatively
highpricefor aproduct orservice at
first, then lowers the price over time.

Classroom activity 4
Take the example of any one of the
following companies
ITC, TATA, NESTLE, HUL, P & G,
AMUL, DABUR, EUREKA FORBES,
MAHINDRA & MAHINDRA
Analyze a few brands of the
chosen company and examine
the pricing strategies