jaiib super notes: principles and practices of banking: module-d: pricing
TRANSCRIPT
JAIIB – Super-Notes © M S Ahluwalia Sirf Business
Pricing
Module D: Support Services
Marketing of Banking Services/Products
JAIIB – Super-Notes © M S Ahluwalia Sirf Business
JAIIB – SUPER NOTES
Principles & Practices of Banking: Pricing
JAIIB – Super-Notes © M S Ahluwalia Sirf Business
Contents
Coverage:
1. Importance of Pricing
2. Objectives of Pricing
3. Factors influencing Pricing
4. Pricing Methods
5. Pricing Strategies
6. Bank Pricing
JAIIB – Super-Notes © M S Ahluwalia Sirf Business
IMPORTANCE OF PRICING
1.
JAIIB – Super-Notes © M S Ahluwalia Sirf Business
Pricing
• Price is the sum value of all the values that consumers
exchange for the benefits or having or using the product or
service
JAIIB – Super-Notes © M S Ahluwalia Sirf Business
OBJECTIVES OF PRICING
2.
JAIIB – Super-Notes © M S Ahluwalia Sirf Business
Objectives
Profit Survival Market Share
Cash Flow Status Quo Product Quality
Communicating Image
JAIIB – Super-Notes © M S Ahluwalia Sirf Business
FACTORS INFLUENCING PRICING
3.
JAIIB – Super-Notes © M S Ahluwalia Sirf Business
Factors Influencing Pricing
Factors
Internal factors
External factors
JAIIB – Super-Notes © M S Ahluwalia Sirf Business
PRICING METHODS
4.
JAIIB – Super-Notes © M S Ahluwalia Sirf Business
Pricing Methods C
ostg
-Based P
ricin
g
Mark Up Pricing: Variable costs and contribution for fixed costs
Absorption Cost Pricing: Margin for profit
Target Return Pricing: Return on the investment
Marginal Cost Pricing: Direct variable costs are fully realized. Only a portion of fixed costs may realized
Valu
e-B
ased P
ricin
g
Perceived Value Pricing: Buyer’s perception of value
Value Pricing: Product with high value at a fairly low price
Co
mp
eti
tio
n-B
ase
d
Pri
cin
g
Going Rate Pricing: Based on competitor’s prices
Auction Type Pricing:
•English Auctions - One seller many buyer
•Dutch Auctions
•Sealed Bid Auctions
Group Pricing
JAIIB – Super-Notes © M S Ahluwalia Sirf Business
PRICING STRATEGIES
5.
JAIIB – Super-Notes © M S Ahluwalia Sirf Business
Pricing Strategies
Geographical pricing
Price discount and allowances
Psychological pricing
•Loss-leader pricing: Loss is covered by sale of other items
•Special event pricing
•Cash rebates
•Low-interest financing
•Longer payment terms
•Warranties and service contracts
•Psychological discounting
Promotional pricing
• First degree: Different prices to each customer depending upon their intensity of demand
• Second Degree: Lower prices for buyers of a larger volume
• Third degree: Depending upon class of buyer:
• Customer Groups: Student, Senior Citizen
• Product form
• Image pricing
• Channel
• Location
• Time
Discriminatory pricing
Market Skimming Pricing
Market Penetration Pricing
JAIIB – Super-Notes © M S Ahluwalia Sirf Business
Pricing Strategies
• Product Line Pricing: Developing a product line
• Captive Product Pricing: Main product at lower price, ancillary product at higher price
• Two-Part Pricing: Split into fixed and variable component
• By-Product Pricing: Byproducts obtained in production of other products
• Product-bundling pricing
Product Mix Pricing
JAIIB – Super-Notes © M S Ahluwalia Sirf Business
BANK PRICING
6.
JAIIB – Super-Notes © M S Ahluwalia Sirf Business
Bank Pricing
Bank Pricing:
There are two major costs, which have to be considered while pricing bank products:
• Interest cost
• Servicing cost
Interest cost constitutes 67 % of the price and service cost is around 33 % in any bank product.
Other factors:
• Risk and return
• Monetary policy
• Capital adequacy
• Cost-benefit analysis
JAIIB – Super-Notes © M S Ahluwalia Sirf Business
Thank You!
Do you have any questions or queries or some feedback
to give?
Just mark an email to [email protected]
JAIIB – Super-Notes © M S Ahluwalia Sirf Business
M S Ahluwalia, amongst other things, is a visual artist, blogger,
blog designer and of course an MBA and Banker from New
Delhi, India.
To know more about him you may visit his blog-site: Estudiante De La Vida
For more Super-Notes visit: Sirf Business