Price

• The amount of money charged for a product

or service, or the sum of the values that
consumers exchange for the benefits of having
or using the product or service.
• Price = Customer cost; Price = Cost + Profit
• It should be fixed in such a manner so that the
target customer’s cost can be minimized while
maximizing the company profits
 The Nature of Price
• Price
–The value exchanged for products in a marketing
exchange
• Barter
–The trading of products; the oldest form of
exchange
• Terms Used to Describe Price
–Tuition, premium, fine, fee, fare, toll, rent,
commission, dues, deposit, tips, interest, taxes
 Pricing in International Market

• Adjusting prices for International Markets

• Price depend upon cost, consumers, Economic

conditions and other factors.
 Pricing Objectives
The company first decides where it wants to
position its market offering. The objective
could be :-
• Survival
• Profit maximization
• Target return on investment
• Market share
• Product quality
• Resource mobilization
 Pricing-Internal Factors
• Objectives of the company
• Product characteristics
• Cost of production
• Goodwill of the firm
• Product life cycle
• Promotion of products
• Product line
• Credit Policy
 External Factors
• Market and demand
• Competition
• Economic conditions
• Government regulation
• Suppliers
• Buyer behavior
 Factors in International Pricing
• Setting pricing & strategic objectives
• Monitoring price- setting behavior by
competitors
• Evaluating consumers
• Relating price to a firm’s costs & profit goals
• Understanding the product- specific factors
• Recognizing differences in the country
environment governing prices.
 Market Share
• Generally follows law of demand
• International Pricing normally based on PPI
and CPI
• Pricing basis can be done on Wholesale Price
Index of the manufacturers
• Guarding against Monopolistic and Restrictive
trade practices although ideally every exporter
would like to have 100% market share
 Tariffs & Distribution costs
• Tariffs are in the form of Duties and taxes
• Tariffs can also be in the form of trade barriers in
the form of subsidies
• Costs take into account the taxes and duties
• Distribution costs include the cost of supply
chain
This includes, Commissions, Shipping costs, Cost
of setting up the supply chain for products
 Culture
• Based more on promotional activities
• Localization of products, a necessity which
might effect a major change in the product
signature
• Pricing should go in line with the consumer
behavior of the targeted market
• What is right in one country may not apply to
other countries?
 Purchasing Power

• Depends on :-
The strength of the currency
Employment
GDP growth
Exchange Rate
 Cost

• Should keep low in the short run for a long

term gain
• May operate at No-Profit-No-Loss Level
initially
• Cost of promotion
• Cost of distribution
 Types of Pricing
• Markup Pricing
• Cost plus pricing
• Perceived value pricing
• Value pricing
• Geographic pricing
 New Product Pricing Policies

• Skimming price policy

• Penetration price policy
 Market skimming

• High Price, Low Volumes.

• Suitable for products that have short
life cycles.
• Results in fewer most
• Profitable sales.
 Market Penetration

• Low Price, high Volume

• Suitable for products which have long life
cycles.
• Useful in launching into new market.
• Gain market Share.
 PLC & Pricing Decisions

• Introductory Stage.
 Skimming price strategy.
 Penetration Price strategy.

•Growth Stage.
Lowering of Prices.

• Maturity Stage.
Lowering of price
Raising product features
Extended warranties

• Decline stage
 Product Mix Pricing Strategies
Optional-Product Product Line Pricing Captive –Product Pricing
Pricing Setting Price Steps Pricing Products That Must Be
Pricing Optional or accessory Between Product Line Used
Products Along With The Main Product
Items
Sold With The Main Product

By-Product Pricing Product –Bundle

Pricing Low-Value By- Pricing
Products To Bundles Of Products Sold

Product Get Rid of Them Together at a Reduced Price

Mix Pricing
Strategies
 Price Discrimination
• First degree price discrimination
• Second degree price discrimination
• Third degree price discrimination
CONCLUSION