PRICING

PRICING OBJECTIVES
 PRICING plays a
significant role in
achieving company’s
objectives.
• Survival
PRICING generates
REVENUES
 If
• it does not remain profitable
• it is not generating enough
growth
the company is coming to its
natural end.
• Avoid government
investigation
• Obtain or Maintain the
Loyalty and Enthusiasm
• Enhance the Image of the
firm, brand or product
• Be Perceived as “Fair” by
customers and potential
customers
We Marketing Managers in
fact have to be treated and
considered “Fair”.
 • Create interest and
excitement about a product
 Definition of a Product

“In marketing, a product is anything that can

be offered to a market that might satisfy a
want or need. However it is much more
than just a physical object. It is the
complete bundle of benefits or
satisfactions that buyers perceive they will
obtain if they purchase the product”.
• Discourage Competitors
Set and Maintain your prices
Initial period of any product is
difficult.
• Set your prices
• Cut your prices
• Pass benefit to your
customer
 • Social, Ethical, or
Ideological objectives
We can not afford to be anti-
social, unethical and against
the ideology.
• Get Competitive
Advantage
We have in our hands the
“Tool of Pricing Policy”.
DISCOUNTS AND
ALLOWANCES
“Discounts and allowances are
reductions to a basic price”.
Discount is Cash Reduction in
basic price.
 The manufacturer's list price is
determined by the manufacturer
and often printed on the package.
The retail price is set by the
retailer and often attached to
the product with a sticker.
The list price is that which is
quoted to a potential buyer,
usually in written form.
The Purposes of
Discounts
• Discount is passing benefit to
the customers.
• Win the loyalty of the customers.
• Move out-of-date stock.
• Reward valuable customers.
• Sales Promotion.
Types of discounts and
allowances
1) Cash discounts for
prompt payments
2) Quantity Discounts
 2) Quantity discounts

These are price reductions given

for large purchases.
3) Trade Discounts
3) Trade discounts (also called
functional discounts)

These are payments to

distribution channel members
for performing some function
4) Seasonal Discounts
 4) Seasonal discounts

These are price reductions

given when an order is placed
in a slack period.
5) Promotional
Allowances
5) Promotional allowances

These are price reductions

given to the buyer for
performing some promotional
activity.