5. POSITIONING ON QUALITY AND PRICE MARUTI 800 PRICE ALONE ZEN ME TOO BUT CHEAPER ESTEEM EASE/CONVENIENCE OPEL – OCTRA MIDDLE LANCER – QUALIS SPECIAL NEEDS CAMI-TOYOTA-BMW LUXURY MERCEDES-BENZ ULTIMATE EXAMPLE (AUTOMOBILES) SEGMENT

6. Nine Price-Quality Strategies 9.Economy Strategy 8.False economy Strategy 7.Rip-off Strategy Low 6.Good-value Strategy 5.Medium-value Strategy 4.Overcharging Strategy Medium 3.Super-value Strategy 2.High Value Strategy 1.Premium Strategy High Low Medium High P R O D C T quality Price

11. INELASTIC AND ELASTIC DEMAND dy 5 dx 30 PRICE 15 10 10 20 30 QTY DEMAND dx 5 dy 10 RELATIVELY IN ELASTIC DEMAND dx 5 dy 30 MORE ELASTIC DEMAND PRICE 15 10 10 20 30 QTY DEMAND dy 5 dx 10

18. PRICE ELASTICITY OF DEMAND IT IS IMPORTANT TO KNOW THE PRICE ELASTICITY OF DEMAND TO FIX THE PRICE. DEMAND IS LESS ELASTIC UNDER THE FOLLOWING CONDITIONS Contd…

36. QUANTITY DISCOUNTS - THIS IS GIVEN FOR CERTAIN VOLUME PURCHASES. FUNCTIONAL DISCOUNTS – THEY ARE ALSO CALLED TRADE DISCOUNTS. THIS IS FOR CHANNEL MEMBERS LIKE DISTRIBUTORS, WHOLESALERS, RETAILERS, STOCKISTS, BROKER AGENTS. THIS IS A REWARD FOR STOCK KEEPING, WAREHOUSING, FORWARDING, CLEARING, ACCOUNTING, BILLING, FINANCING, GUARANTEEING etc,.

37. ALLOWANCES - TRADE IN ALLOWANCE (FOR GIVING THE OLD MODEL LIKE OLD TV OR OLD CAR) PROMOTIONAL ALLOWANCE – THESE ARE PAYMENTS OR PRICE REDUCTION TO DEALERS IN PARTICPATING IN ADVERTISING AND SALES PROMOTIONAL PROGRAMS

38. REBATES - REBATES ARE GIVEN TO STIMULATE SALES – REBATES ARE NORMALLY PASSED ON TO THE BUYER. KHADI & VILLAGE INDUSTRIES DEVELOPMENT BOARD GIVE FESTIVAL REBATES FOR THEIR PRODUCTS ESPECIALLY TEXTILES

40. PROMOTIONAL PRICING LOSS LEADER PRICING - SUPER MARKETS DROPS PRICES ON WELL KNOWN BRANDS. THIS ATTRACTS MORE CUSTOMERS TO THEIR SHOPS AND INCREASE TOTAL SALES. SPECIAL EVENT PRICING - TO ATTRACT CUSTOMERS IN CERTAIN SEASONS – LIKE ONAM, CHRISTMAS, DIWALI etc,. CASH REBATES - THIS IS GIVEN TO BUYERS LOW INTEREST FINANCING – CAR DEALERS LONGER PAYMENT TERMS WARRANTIES AND SERVICE CONTRACTS PSYCHOLOGICAL DISCOUNTING - ORIGINAL PRICE Rs 500 NOW ONLY Rs 399/-

41. KOTLER SAYS, “ PROMOTIONAL PRICING IS ZERO SUM GAME. THEY WORK, COMPETITORS COPY THEM AND ITS EFFECT IS LOST. IF THEY DO NOT WORK, THEY WASTE COMPANY MONEY”.

44. IN A CONTROLLED ECONOMY, ESPECIALLY IN SHORTAGE SITUATION THE GOVERNMENT OR PUBLIC AUTHORITIES ENFORCE DISCRIMINATORY PRICE FOR EQUITABLE DISTRIBUTION OF ESPECIALLY ESSENTIAL ITEMS AND UTILITIES. IT IS CONTROLLED BY RATIONING, PERMIT, QUOTA, AND PRICE FIXING. THIS ALWAYS LEADS TO BLACK MARKET, BLACK MARKET ECONOMY AND BLACK MARKET PRICES. WHY ?

45. PRODUCT MIX PRICING WHEN A PRODUCT IS A PART OF A PRODUCT MIX, THE PRICING IS MODIFIED TO TAKE CARE OF THE TOTAL REVENUE FROM ALL PRODUCTS AS A MIX. THE COMPANY HERE FIX THE PRICE TO MAXIMISE THE TOTAL REVENUE AND PROFIT. THERE ARE SIX SITUATIONS WHERE PRODUCT MIX PRICING IS ADOPTED