PRICING

PRICING is extremely
important segment of
Marketing Management.
The Product success or failure and
the marketing efforts basically
revolve around Pricing.
Efficient Price
and
Effective Price
 An efficient price
“Is a price that is very close to the
maximum that customers are
prepared to pay”.
An Effective Price
 An Effective Price
“Is the price the firm after
accounting for discounts,
promotions, and other
incentives”.
Premium Pricing
Premium Pricing is also
called prestige pricing.
 Premium Pricing

“Is the strategy of pricing at, or

near, the high end of the possible
price range”.
Why people are willing to pay
more?
1.The high price is an indication
of good quality;
1.They believe the high price is
an indication of good quality;
2. They believe it to be a sign of
self worth - "They are worth it" - It
authenticates their success and
status - It is a signal to others that
they are a member of an
exclusive group;
 3.They require flawless
performance in this application -
The cost of product malfunction is
too high to buy anything but the
best.
example : heart pacemaker
PSYCHOLOGICAL
PRICING
PSYCHOLOGICAL PRICING
“Where the price particularly
price tag shows a little less than
a round number”.
Example: Rs.19.99 instead of
Rs.20
Consumers ignore the least significant
digits rather than do the proper
rounding. Even though the paisas are
seen and not totally ignored, they
may subconsciously be partially
ignored. Some suggest that this effect
may be enhanced when the paisas
are printed smaller.
 The theory of psychological pricing is
controversial. Some studies show that buyers,
even young children, have a very sophisticated
understanding of true cost and relative value and
that, to the limits of the accuracy of the test, they
behave rationally….. Other researchers claim
that this ignores the non-rational nature of the
phenomenon and that acceptance of the theory
requires belief in a subconscious level of thought
processes, a belief that economic models tend
to deny or ignore. Research using results from
modern scanner data is mixed.
PSYCHOLOGICAL PRICING is
the driving force.
 • Ability to Pay
• Willingness to Pay
 The theory of psychological pricing is
controversial. Some studies show that buyers,
even young children, have a very sophisticated
understanding of true cost and relative value and
that, to the limits of the accuracy of the test, they
behave rationally….. Other researchers claim
that this ignores the non-rational nature of the
phenomenon and that acceptance of the theory
requires belief in a subconscious level of thought
processes, a belief that economic models tend
to deny or ignore. Research using results from
modern scanner data is mixed.
When a person takes a
decision of buying a
particular product the last
thing he analyses is the
price.
 The theory of psychological pricing is
controversial. Some studies show that buyers,
even young children, have a very sophisticated
understanding of true cost and relative value and
that, to the limits of the accuracy of the test, they
behave rationally….. Other researchers claim
that this ignores the non-rational nature of the
phenomenon and that acceptance of the theory
requires belief in a subconscious level of thought
processes, a belief that economic models tend
to deny or ignore. Research using results from
modern scanner data is mixed.
Research supporting odd pricing
theory

In a study, the perceived value of all

the numbers between 1 and 100
were studied, and 77 was shown to
have the lowest perceived value
relative to its actual value.
We use different products by
brand names. Quality of
brands is understood and
established.
RETAIL PRICING
 RETAIL BUSINESS

“Retailing is the dead end of

product distribution”.
Retailing is when product is
transferred to the customer.
 Village Economy Town
Economy Provincial Economy

Area Economy Country

Economy International
Economy
 Retailing consists of the sale of
goods/merchandise for personal or
household consumption either from a
fixed location such as a department
store or kiosk, or away from a fixed
location and related subordinated
services.
In the nineteenth century, in France,
arcades were invented, which were a
street of several different shops,
roofed over.
The first is counter-service, once
the only type of shop, but now
rare except for selected items.
Exchange takes place at
retailer’s end.
Marketing Managers must
control this chain activity.
There are three major types of
retailing, two of which have
buildings that the customer can
visit to do business with.
The first is counter-service, once
the only type of shop, but now
rare except for selected items.
The second, and now more
widely used method of
retail, is self-service.
Quickly increasing in importance
are online shops, the third type,
where products and services
can be ordered for physical
delivery, downloading or
virtual delivery.