Pricing Strategy

it affects other marketing mix element Pricing In Rural Market plays a key role in the success of a product Affordability is determined by two factorsincome of consumer price of the products and service ‡ ‡ ‡ ‡ .is very important element of the marketing mix . salary etc Price .is an important strategic issue because it is related to positioning . or when we enter a new market with an existing product How? ± Need to decide what position you want your product to be in Pricing ± Definition the amount of money charged for a product or service the sum of all the values that consumers exchange for the benefits of having and using the product and service Price can be in any for rent .Introduction ‡ ‡ ‡ We need to set price when we have a new product.

the marketers has allocate huge efforts and resources to all the elements of marketing mix and also need to invest in market development. which can help marketers to keep the overall costs under control .Factors influencing the price ‡ ‡ Factors can be categorized as Internal and External Internal Influence: internal factors affecting areCost-in order to tap rural market.promotion as a cost factor .need to establish an effective distribution channel differentiated by multiple intermediaries .regional media are more visible at the local level. .require sufficient resources for packaging. promotions and communication strategies suitable for rural consumers .credit based transactions increase costs .

HLL has made sustained efforts to tap rural market by investing in an innovative distribution channel ( Project Shakti). Pricing Objectives: it need to be compatible with marketing rural market. adopted regional media.. including target market selection and the desired positioning hence pricing objectives of a company must be clearly identified In rural market.g. the companies should expect long tern profit and penetrate the market with introducing low priced product with low profit . the level of consumer involvement and nature of competition ‡ Profit maximization in the long run.‡ E. ITC initiated an innovative model to procure farm produce for its business CavinKare Pvt. customized promotion (operation bharat) communication strategy. Ltd.

g. Increasing sales Volume and Market Share e. Low Priced shampoo Cavinkare realized that for a family of five members at rs. so company launches its product at a lower price.180(the Phillips radio set cost Rs.g. 40 spend fro a shampoo .g. .Minimum returns on sales turnover Deeper penetration of the markethere objective is market expansion. Many rural families cannot be afford expense. Videocon :Pricing Strategy Videocon was one of the first companies to enter the rural market with a plethora of products in the home appliances.250) and grabbed a major chunk of the market.2 per sachet and minimum of four hair washes per person per month would mean a Rs. E. Britannia tiger biscuits Keeping with competition E. It attacks market leader Phillips by launching a radio set for Rs.

competitors and legal environment ± key issues in determination of price . suppliers.External Influence: ‡ ‡ ‡ Pricing is the impact of price on demand and sales volume Effect of competitive environment on marketing activity is also important Customers.

the influence of external and internal factors Rural Occupation pattern optional product pricing-offering to sell option or accessory products along with their main product captive product pricing.Pricing Strategies: ‡ Marketers can follow a particular pricing strategy depending on .companies objectives and .setting a price for products that must be used along with the main product ‡ .

.g.4 Pricing the product at a lower price really attracts rural population for trying the products. .Tata tea introduced Samunder salt in the economy category. . The deposits for 5 kg cylinder is Rs.5 is an appropriate price point to draw new customers and increase consumption. Pepsodent toothpaste is available for Rs. Some innovation in packing technology is very necessary for rural markets.HLL sells the maximum number of its products in sachet packs in rural areas.Bharat Petroleum has introduced five kg gas cylinders to reduce initial deposits and refill cost for rural consumers. .‡ Low Price Points: This is a common strategy being adopted widely by many manufacturing and marketing men. 350 ‡ Avoid sophisticated packaging.For many FMCG companies . Simple package can be adopted which can bring down the cost as it is presently being done in the case of biscuits. Price can be kept low by small unit packings. . Rs. e.

Yes TD booth product bundle pricing.g.By giving refill packaging marketers can add value pricing of the product.Such measures have a significant impact on the rural market.customer cooperate to purchase the product and then share the benefits with each other. not price e.In addition the packaging material used should preferably lend itself for reuse in rural areas e.g.Refill/Reusable Packaging .is combining several products and offering the bundle at a reduced price ‡ . sellers combine several products in the same package . hero honda CD 100 motorcycles are popular in rural areas Product Sharing price. Bournivita available in refill pack Asian Paints has introduced emulsion in 10-litre and 20-litre reuseable bucket packs ‡ ‡ Highlight Value . E. .

Operation Bharat: Bundle-Price Strategy ‡ HLL launched a combo pack comprising a Clinic shampoo bottle. attitudes and habits As consumers in rural areas were exposed to and became familiar with such value added value for money alternatives.10 and Rs. . HLL provided hampers at discounted prices of Rs. The project was aimed at addressing issues of consumers awareness.20 each in different sizes and combinations. 5 Rs.s Dream Flower Talc fro rural areas. a tube each of pepsodent and Fair & Lovely ad Pond.

. often lower than the eventual market price.Market Entry Strategies: ‡ Penetration Pricing: .is the pricing strategy where the organization introduces its products or services to its customers at a comparatively lower price than the existing market price. .it works on the principle that the price sensitive customers will switch to new brands because of its low pricing. ..The idea behind penetration pricing is to generate sales among consumers who look for bargains. it helps in increasing sales and volume of the product and hence its market share rather than short term profits. to attract new customers .it is most commonly associated with a marketing objective of increasing market share or sales the pricing technique of setting a relatively low initial entry price. . rather than to make profit in the short term.

Economy Pricing.regional and local manufacturers follow this pricing strategies .price are set at a coin value . rice and spices as there is huge market for loose offering along with packaged products in this the case of commodities such as pulses. ‡ Value Pricing .the costs of marketing and manufacturing are kept to a minimum .g.there is no-frills low price . company provide µvalue¶ products and services to retain sales is used in case when external factors is directly proportionate to the package size ‡ . value meals at Mc Donald's Ajanta offered a µvegetarian toothpaste at a low price ‡ Coinage Pricing .

the price quality relationship refers to the idea that consumer tend to equate product quality with the price charged . rather than rational basis ‡ Discounts and Allowance .it is used to reward customer responses Cash discounts or bargaining benefits Free gift Schemes for retailers Discriminatory pricing : customer segment pricing product form pricing location pricing ‡ .Psychological Pricing .this approach is used when marketers wants the consumer to respond on an emotional.

.Conclusion: ‡ ‡ ‡ ‡ Pricing is a determinant of the market demand for the product Pricing decisions are influenced by internal and external factors Business offer various price adjustments to all types of buyers who satisfy some criteria Therefore marketers need to have an understanding of the internal and external factors in order to determine the optimal pricing strategy in accordance with customer¶s tastes and preferences and other entities in the value chain.

you can also minimize pricing conflicts with your channel partners. . By doing so. you¶ll ensure that your pricing reflects your value proposition and reinforces your brand.‡ ‡ ‡ Key steps & concepts Before you begin It¶s best to create your brand strategy and identify your distribution channels before you develop your pricing strategy.