presentation-product line pricing
TRANSCRIPT
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8/7/2019 PRESENTATION-Product line pricing
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Managerial Economics
PRESENTATION ON
PRODUCT LINE PRICING
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Presented By
NAME COURSE ROLL NO
MADHUSUDAN HANWAT MMM M091056
SUMIT KADAM MFM F091019VIDULA PARADKAR MHRDM H091030
MANGESH J. PATIL MHRDM H091014
SUJEET KOTHAWALE MFM F091023
RAM VERMA MMM M091043
BABURAO BHADHE MMM M091050
KOMAL KATKADE MHRDM H091009
SATYAVAN RAUNDHAL MMM M091051
MANOJ JADHAV MFM F091015
KANAIYA BAROT MMM M091006
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Product Line
Product lining is the marketing strategy of
offering for sale several related products. Unlikeproduct bundling, where several products arecombined into one, lining involves offeringseveral related products individually.
Price lining is the use of a limited number ofprices for all your product offerings
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Product Line Contd...
Product line concept related to Width andlength of product Mix.
Width of Product Mix
Length of Product Mix
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Product Line Pricing
The setting of prices for all items in a product lineinvolving the lowest-priced product, the highestprice product, and price differentials for all otherproducts in the line.
Example:
Establishing a single price for all products in a
product line, such as having a price of $55 forthe high-priced line of dress shirts, $45 for themedium-priced line, and $35 for the lower-pricedline.
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Product line Pricing Strategy
Product line pricing strategy can be used
when you are in the process of building awhole product line.
Optional -feature pricing
Ancillary product pricing
Twopart pricing
Product bundling pricing
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Contd..
The element which affects Product Line
pricing:
Product life cycle Interdependency of the products
When a product will leave the line
When a new product is scheduled to enter theline.
How the products in line complement eachother.
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Price Discrimination
Practice of charging different customerdifferent prices is Price Discrimination.
Price discrimination is a feature ofmonopolistic and oligopolistic markets, wheremarket power can be exercised.
Necessary Conditions forPrice
Discriminations are
1. The Market must be Segmentable.
2. There is no Resale.
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Contd..
Price Discrimination is profitable if and only ifthe Price elasticity of demand is different in
different Markets. The effects of price discrimination on social
efficiency are unclear; typically such behaviorleads to lower prices for some consumers
and higher prices for others.
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Types of Price Discrimination
First degree price discrimination :
Price varies by customer's willingness or
ability to pay. Second degree price discrimination :
Price varies according to quantity sold.
Third degree price discrimination :Price varies by attributes such as location orby customer segment.
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Contd..
Price skimming :
Company start reducing the price from high to
low. Price skimming is closely related to theconcept of yield management.
Combination :
Company may vary pricing by location bygiving Bulk, Incentives, Seasonal discounts tocustomers.
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Examples of Price Discrimination
Retail price discrimination
Travel industry
Premium pricing Segmentation by age group and student
status
Haggling Dual pricing
Financial aid in education
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Demand Relationship in
Product line
Two Demand characteristics peculiar to
Multiple Product line are
Interdependent of demand for variousproduct of members line.
Product line for market segmentations andprice discriminations.
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Retail Product line pricing
Strategy
Retailer must know how to adjust their pricesin response to various types of cost shocks.
When the costs of specific productcomponents or ingredients change, howshould retailers re-adjust the prices of theaffected product lines?
what will be the impact on profit margins, therange of prices in the line and the averageprice in the line?
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Contd..
If a product is removed, perhaps suddenly,from the line, how should the retailer adjust
the other prices in the line? Answers to this question depends on the
nature of the demand relationships betweenthe variants in the line.
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Alternative Policies
Prices Proportional to Full Cost
Prices Proportional to Incremental Cost
Prices Proportional to Conversion Cost Prices that depend upon the elasticity of
demand of different market segment.
Prices which are related to stage of Marketand competitive development of Individual
members of product line.
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Conclusion
Thus we can conclude that Manufacturersare using product lines as a price
discrimination tool.
We also study the product line selections andthis shows if the degree of competition
increases, prices approach marginal cost.
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