"&$%

rlclng should be opLlmum affordable

and falr
CpLlmum generaLe proflL
Affordable cusLomers
lalr beaL compeLlLlon
SLaLe Lhe ob[ecLlves of prlclng and explaln how prlclng sLraLegy can be
used Lo achleve above menLloned characLerlsLlcs?
Llnk prlclng sLraLegles by examples wlLh LC and 8CC models??
8lClnC
W r|c|ng ls Lhe process of deLermlnlng
whaL a company wlll recelve ln
exchange for lLs producLs
W rlclng facLors are manufacLurlng
cosL markeL place compeLlLlon
markeL condlLlon and quallLy of
producL
W rlce ls Lhe only revenue generaLlng
elemenL amongsL Lhe four s Lhe
resL belng cosL cenLers
8lClnC ln LC
W ln18CuuC1lCn S1ACL
r|c|ng may be low peneLraLlon prlclng Lo bulld markeL
share rapldly or hlgh sklm prlclng Lo recover developmenL
cosLs
W C8CW1P S1ACL
r|c|ng ls malnLalned as Lhe flrm en[oys lncreaslng demand
wlLh llLLle compeLlLlon
W ,A1u8l1? S1ACL
r|c|ng may be lower because of Lhe new compeLlLlon
W uLCLlnL S1ACL
8educe cosLs and provlde varlous offers and dlscounLs
S1A8
Value pricing
Premium pricing
Competition
S1A8
Value pricing
Premium pricing
Competition
CASP CCW
Demand base pricing
Affordability pricing
Psychological pricing
CASP CCW
Demand base pricing
Affordability pricing
Psychological pricing
CuLS1lCn ,A8k?
Penetration pricing
Skimming pricing
Promotional pricing
CuLS1lCn ,A8k?
Penetration pricing
Skimming pricing
Promotional pricing
uCC
Discounted pricing
Or
price cut
uCC
Discounted pricing
Or
price cut
8LLA1lCn Wl1P 8CC
BCG Matrix
The BCG or Growth-Share matrix imposes a two-dimensional analysis on
management oI Strategic Business Units:
a comparative analysis of business strength and an assessment of the
environment.
The business strength measure is the business's Relative Market Share.
The environmental measure is the Market Growth Rate.
Formulas for Relative Market Share and Market Growth Rate:
1he Lwo dlmenslonal analysls of 8CC ,aLrlx
Stars
Cash Cows Dogs
Problem Child
Relative market share
M
a
r
k
e
t

g
r
o
w
t
h

r
a
t
e

M
a
r
k
e
t

g
r
o
w
t
h

r
a
t
e

Relative market share
M
a
r
k
e
t

g
r
o
w
t
h

r
a
t
e

BCG Matrix
8evenue ++++
Lxpenses _ _ _
neL +
8evenue +
Lxpenses _ _ _ _
neL _ _ _
8evenue + + + + +
Lxpenses _
neL ++++
8evenue ++
Lxpenses _ _ _ _
neL _ _ _
8CG+LC
MAPKE!|NB
BBJEB!|\ES
+ P|B
+ BBB
STRATEGIC THRUSTS + BCG
$$
W The Boston Consulting Group identiIied Iour
major strategic thrusts in terms oI market
share.
W Once the products have been plotted, the
planner then has to decide on a strategy Ior that
product. There are 4 major strategies that can
be Iollowed.
Build
Hold
Harvest
Divest
$$
W 8u||d
The product or SBU`s market share needs to be
increased to strengthen its position. This strategy
is suited to Question Marks Question Marks.
lnvesL ln one or more S8us Lo bulld a share
W |d
The objective is to maintain the current share
position and this strategy is oIten used Ior ash ash
ows ows so that they continue to generate large
amounts oI cash.
lnvesL [usL enough Lo malnLaln a share ln Lhe
markeL
$$
W Harvest
Here management tries to increase short-term cash Ilows as Iar
as possible (e.g. price increase, cutting costs).
It is a strategy suited to weak ash ows weak ash ows or Cash Cows that
are in a market with a limited future limited future.
Harvesting is also used Ior Question Marks Question Marks where there is no
possibility oI turning them into Stars, and Ior Dogs.
W ivest
The objective oI this strategy is to rid the organization oI the
products or SBUs that are drain on proIits and to utilize these
resources elsewhere in the business where they will be oI
greater beneIit.
This strategy is typically used Ior Question Marks Question Marks that will
not become Stars and Ior Dogs Dogs.

CashCs Dgs

ars ues|n,arks
kema|nder kema|nder
d|ves d|ves
e|ec e|ec
ae ae
||qu|dae ||qu|dae
STRATEGY FOR SUBSTANTIAL GROWTH
rducraeg|es+8CG
negegraph|ca|markes
nemarkesegmens
ned|sr|bu|n|ead|ngne
cusmers
hr|zna|d|vers||ca|nenlargemenL of
currenL producLs
ver|ca|d|vers||ca|n producLs from pre
or posLsLages of currenL producL porLfollo
|aera|d|vers||ca|n compleLely unrelaLed
Lo currenL buslness
rea||nnva|ncmp|ee|yne
prducs
mrer|essneprducs
spec|a||sa|n ex|s|ngprducs
|ncreaseusageamngregu|ar
cusmers
ga|ncusmersrmcmpe|rs
geneusers
,kkL1DLVLLC,LN1 ,kkL1LNL1k1ICN
DIVLkIIIC1ICN
kCDUC1DLVLLC,LN1
r|c|ngraeg|es+8CG
k|mm|ngraegy
enera|nraegy
rm|na|raegy
D|scunedr|ceraegy
rm|na|raegy
Demandbasedr|ceraegy
sych|g|ca|r|ceraegy
Va|uer|c|ngraegy
rem|umr|ceraegy
IUNC1ICNLUCk11k1LGIL
W luncLlonallevel sLraLegles are concerned wlLh
coordlnaLlng Lhe funcLlonal areas of Lhe
organlzaLlon (markeLlng flnance human
resources producLlon research and
developmenL eLc)
W 1hls lnvolves coordlnaLlng Lhe varlous
funcLlons and operaLlons needed Lo deslgn
manufacLurer dellver and supporL Lhe
producL or servlce of each buslness wlLhln Lhe
corporaLe porLfollo
luncLlonal sLraLegles are prlmarlly concerned wlLh
W LfflclenLly uLlllzlng speclallsLs wlLhln Lhe
funcLlonal area
W lnLegraLlng acLlvlLles wlLhln Lhe funcLlonal area
(eg coordlnaLlng adverLlslng promoLlon and
markeLlng research ln markeLlng eLc)
W ln producL porLfollo cash flows from one Lo
anoLher S8u requlres Lhe funcLlonal supporL
W Assurlng LhaL funcLlonal sLraLegles mesh wlLh
buslnesslevel sLraLegles and Lhe overall
corporaLelevel sLraLegy
8CG,ar|x
(1hreeahsuccess)
W ConLlnuously generaLe cash cows and
use Lhe cash from Lhe cash cows Lo
lnvesL ln Lhe quesLlon marks LhaL are
noL selfsusLalnlng
W 8elnvesL ln SLars as Lhe markeL
maLures sLars wlll degeneraLe lnLo
cash cows and Lhe process wlll be
repeaLed
W SegmenL Lhe markeL for dogs nurse
Lhe dogs Lo healLh or manage for cash

CashCs Dgs

ars ues|n,arks
(egmen) (egmen)
1hreeahsuccess
8CG,ar|x
(1hreeahsIa||ure)
W Cver lnvesL ln cash cows and
under lnvesL ln quesLlon marks
W under lnvesL ln Lhe sLars
W Cver mllk Lhe cash cows

CashCs Dgs

ars ues|n,arks
1hree aLhs Lo lallure