CATERPILLAR Vs KOMATSU

SUBMITTED BY :-
Caterpillar VS Komatsu
- price Caterpillar's bulldozer

 Cost to make 1 unit (given volume in demand) =

$30k
 Perceived worth of customers (expected life is 5 yrs)
= $100k
 Added value = $70k
 Pricing options—
 Share equally P = $65k.
 Take a higher share, P = $80k
 Take a smaller share, P=$50k.
Strategy to follow depends on
 Cost & profit of Caterpillar
 Price & profit of buyer
 How soon can a competitor make an exact
equivalent & at what price would they
market at?
A. KOMATSU can make an exact
equivalent @ 20k within 1 week of
launch of bulldozer by caterpillar

 VP Caterpillar
Pricing strategy
 Min. Selling Price that can be offered by
caterpillar = 30K
 But within 1 week Komatsu will launch
product @20K
 Caterpillar will suffer losses if product is
launched
Komatsu can make an exact equivalent
@ 20K within 1 week of launch of
bulldozer by caterpillar

 VP KUMATSU
Pricing strategy
 If Caterpillar launches product :
 Selling Price of Komatsu = 20K

 If Caterpillar phase out product :

 Selling Price of Komatsu = 80K
B. It will take at least 2 yrs for
Komatsu to launch their product

 VP CATERPILLAR
Cost & profit of Caterpillar
 To recover all investments before
competitor hits the market
 Make reasonable profit for the firm
 To give high delivered value to the
customers
 Capture majority of the market share
Price & profit of buyer
 Total customer benefits (product, service,
personnel, image) should be high
 Non- monetary cost (time, energy, psychic)
should be low
 Monetary costs should be reduced by low
pricing and maintenance cost
Competitive factors
 No competition exists as of now since it is a
new product being developed for the first
time.
 Komatsu will take at least 2 years to copy
the product
Pricing strategy
 Perceived worth = 100K
 Cost to make and market = 30K
 Added value to product = 70K
 Higher share to Caterpillar and lower share to the
customer
 50K & 20K respectively
 Selling Price = 80K (till a few months prior to
launch of Komatsu; after launch by Komatsu,
Selling price = 50K)
It will take at least 2 yrs for Komatsu
to launch their product

 VP KOMATSU
 Response to pricing strategy of Caterpillar
Cost & profit of Komatsu
 Customer delivered value should be higher
than that offered by Caterpillar
 Initially concentrate on market penetration
and give stiff competition to Caterpillar
 Once sizeable market share is captured,
shift focus towards profit.
Price & profit of buyer
 TCB and non-monetary costs are same as
offered by Caterpillar (exact equivalent)
 To increase CDV, monetary costs need to be
lower than Caterpillar
COMPETITIVE FACTORS
 Presence of an established player
 Lack of differential advantage in terms of
product and services offered
PRICING STRATEGY

 Perceived worth = 100K

 Cost to make and market = 20K
 Added value to product = 80K
 Competitors price = 50K
 Selling Price = 20K ( lowest price that
company can afford to offer)
THANKS!!