Rural Marketing

Pricing
Pricing

 Price is the central element of marketing mix, particularly, for rural markets.
Rural consumers are most price sensitive and price plays more decisive role in
buying decisions.
 Pricing policies and its strategies must be formulated with care and caution.
Price level, discounts and rebates, then credit and installment faculties are
important considerations while setting prices for rural specific products.
 Normally, the low-priced products always attract the rural buyers, but rarely
some rural customers are quality and status conscious.
 Pricing is a determinant of the market demand for the product. But before
any pricing decisions are undertaken ,it is important that the factors
influencing price are understood. These factors can be categorized as internal
and external
Influencing factors
 These factors can be categorized as internal and external factors Internal factors :
The internal factors affecting price include cost and the company’s pricing objectives.
cost factors
 Promotion as a cost factor
 Credit based transactions increase costs
Pricing Objectives
 Profit maximization in the long run
 Minimum returns on sales turn over
 Deeper penetration of the market
 Keeping up with the competition
 Increasing sales volume and market share External factor:
This factor includes –
 Customers
 Suppliers
 Competitors
 Legal environment
Pricing strategies
 Optional product pricing Discounts and allowances:
 Captive product pricing • Cash discounts or bargaining
 Product bundle pricing benefits
 Penetration pricing
• Free gift
• Schemes for retailers
 Economy pricing
Discriminatory pricing:
 Value pricing • Customer segment pricing
 Coinage pricing • Product form pricing
 Psychological pricing • Location pricing
Optional product pricing

 Optional product pricing is the pricing of optional or accessory products along

with the main product like a company selling tractors for a low sticker price
but charging high prices for serving and spare parts. Ex:
Captive product pricing

 Captive product pricing is setting a price for products that must be used along
with the main product , such as blade for a razor and film for a camera. Ex:
Product bundle pricing

 Product bundle pricing is combining several products and offering the bundle
at a reduced price . Companies very commonly use this pricing strategy during
periods of inflation it helps to generate sales and attract customers in a
highly competitive market , it is mostly used in festival.
Penetration pricing

 A penetration pricing policy involves setting prices of products relatively low

compared to those of similar products. This pricing policy is appropriate when
demand is elastic.
 Ex: Anchor white and Ajanta tooth pastes used this pricing to enter the
crowded dental cream market
Economy pricing

 Economy pricing is no-frills low price, the cost of marketing and

manufacturing are kept to a minimum. Regional and local manufacturers
usually follow this economy pricing strategy as they have limited investments
to make on building brands and developing channels. Ex: Nirma & Ghari
Value pricing

 When economic recession or increased competition forces a company to

provide value products and services to retain sales.
 Ex: Godrej No.1 soap placed their offering containing rose, sandalwood neem
and other ingredients at a very economical price .
Coinage pricing

 Prices are set of a coin value. Coinage price is directly proportionate to the
package size. These packs are small in size and are normally meant for one
time consumption(shampoo sachet)or days consumption(tea bag)or a week’s
consumption(bathing or washing soap).
Psychological pricing

 The price quality relationship refers to the idea that consumers tend to
equate product quality with the price charged. In the color TV segment LG at
a higher price is considered a better buy than Texla and Jolly brands
particularly in R1 households
Discounts and allowances

 Cash discounts or bargaining benefits

 Free gift
 Schemes for retailers
 Discriminatory pricing
Discriminatory pricing

 Price discrimination exists when sales of identical goods or services are

transacted at different prices from the same supplier, different prices are
charged on the basis of different consumer groups, location, product form
etc. discriminatory pricing may take the following norms:
 Consumer segment pricing
 Product form pricing
 Location pricing
Consumer segment pricing

 Discriminatory pricing based on consumer segments.

 Ex: Museum often charge low admission fee for students and senior citizens.
Product form pricing

 Different versions of the same product are priced differently but not
proportionately to the increase in costs. Ex: Microsoft sold different versions
of its operating software windowsXP at different price level . Windows vista
home basic version is sold at $200 and with some variations the same
operating software windows vista ultimate version is sold at $320.
Location pricing

 Discriminatory pricing based on different locations, even though the cost of

offerings at each location is identical.
 Ex: Theatre charges different prices for different audience preferences for
different locations.
CONCLUSION
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