mm session 5 pricing strategies

MM-Pricing Objectives and Strategies

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PGDM- IVRURAL MARKETING

Arun Kumar Deshmukh,Faculty, Marketing Group,

SBM, JNU, [email protected]

Arundeshmukh.hpage.com

mailto:[email protected]

Session 30:

Pricing Strategies for Rural Market


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Main Points

1. Major Problems in Pricing Strategies

2. Setting the Price for the First Time

3. Selecting Pricing Objectives

4. Selecting Pricing Method

5. Selecting Final Price


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Major Problems in Pricing Strategies

• How to set up price on a product for the first time ?

• How to modify a product’s price to meet changes in marketing environment ?

• How to initiate and respond to price changes ?


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Selecting the Pricing Objectives

Consider Marketing Plan

A) Target market selected; and

B) Desired positioning and brand image

Pricing Objective

A) Survival

B) Current profit maximisation

C) Market share leadership

D) Product quality leadership


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Pricing Objectives can also be regrouped as….

• Profit-oriented– To achieve a target return– To maximise profits

• Sales-oriented– To increase sales volume– To maintain or increase market share

• Status quo-oriented– To meet competition– To stabilise prices / Non-price competition


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Factors Influencing Price Determination

• Estimated Demand• Competitive Reactions

– Directly similar products– Available substitutes– Unrelated products seeking the same customer

outlay

• Other Marketing-mix Elements, and• Cost of the Product


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Selecting a Pricing Method / Strategy

1. Cost plus pricing

2. Target profit pricing (Target ROI)

3. Perceived value pricing

4. Follow the leader / going rate pricing

5. Sealed bid pricing

6. Marginal costing

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The Price Determination Process

Select pricing objective

Select method to determine the base price:Cost-plus Price based on Price set inPricing both demand relation to

and costs market alone

Design appropriate strategiesPrice vs nonprice Geographic pricing High-low vs competition One price vs flexible everyday lowSkimming vs penetration pricing price Reactive vsDiscounts and allowances Leader pricing proactive changes


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Selecting Final Price• Psychological Pricing

• Company Policy

• Influence of other Marketing - Mix Elements

• Other Factors - Effects on :

1. Distributors and dealers

2. Company sales force

3. Competitors

4. Government interference


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Four Introductory Marketing Strategies

PromotionHigh Low

High

Price

Low

Rapid-skimming strategy

Slow-skimming strategy Sony

Rapid penetration strategy Nirma

Slow penetration strategy Babool, Vicco Vajradanti


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Nine Price / Quality StrategiesPrice

Medium LowHigh

Medium

High

Low

Pro

du

ct Q

ual

ity 1. Premium

strategy2. High-value

strategy3. Superb-value

strategy

4. Overcharging strategy

5. Medium-value strategy

6. Good-value strategy

7. Rip-off strategy

8. False economy strategy

9. Economy strategy


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Setting the Price for the First Time

• Selecting the pricing objective

• Determining demand

• Estimating costs

• Analysing competitors’ prices and offers

• Selecting a pricing method; and

• Selecting the final price


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Thank You

mm session 5 pricing strategies

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