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Unit iv pricing

Price is the marketing-mix element that produces revenue; the others produce cost price is also one of the most flexible elements; it can be changed quickly, unlike product features and channel commitments.

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Unit iv pricing

  1. 1. Pricing MANISH KUMAR
  2. 2. Pricing  Pricing is the art of translating into quantitative terms (rupees and paisa) the value of the product or a unit of a service to customers at a point in time.  Pricing is managerial task that involves establishing pricing objectives, identifying the factors governing the price, ascertaining their relevance and significance, determining the products value in monetary terms and formulation of price policies and the strategies, implementing them and controlling them for the best results.
  3. 3. Objectives of pricing  To maximise the profits  Competitive situation  Capturing the market  Long-run welfare of the firm  Price stability  Achieving a target return  Ability to pay  Margin of profit to middlemen  Resource mobilization
  4. 4. Importance of pricing  Product differentiation getting blunted  Mature products and markets  Inflation in the economy  Inter firm rivalry  Customers value perception  Firm now finds itself in a dilemma
  5. 5. Factors influencing pricing Internal factors External factors
  6. 6. Internal factors  Organizational factors  Marketing mix  Product differentiation  Cost of the product  Objectives of the firm
  7. 7. External factors  Demand  Competition  Suppliers  Economic conditions  Buyers  Government
  8. 8. Methods of pricing/price adapting policies Other Pricing Methods Competition Oriented Customer Demand Oriented Cost Oriented
  9. 9. Cost oriented pricing policy  Mark up Pricing or cost plus pricing method  Full cost or absorption cost  Marginal cost or incremental cost pricing method  Break even point or BEP pricing method  Rate of return or target pricing method
  10. 10. Customer Demand-Oriented Pricing  ‘What the traffic can bear’ pricing  Skimming based pricing  Penetration based pricing
  11. 11. Competition oriented pricing policy  Parity pricing or going rate pricing  Pricing below competitive level or discount pricing  Pricing above competitive level or premium pricing  Competitive bidding/ sealed bid/ tender pricing
  12. 12. Other pricing methods  Value based pricing  Affordability based pricing  Prestige based pricing  Market and demand based pricing
  13. 13. Strategies of pricing
  14. 14. Strategies of pricing Product Mix Pricing strategy New product Pricing strategy Promotional pricing strategy Discriminatory pricing strategy
  15. 15. Product mix strategy
  16. 16. New product pricing strategy Market Skimming Market Penetration
  17. 17. Promotional pricing Complementary Pricing Loss Leader strategy Psychological Pricing Psychological Discounting
  18. 18. Discriminatory Pricing strategy Customer Segment Pricing Image Pricing Location Pricing Time Pricing
  19. 19. Promotion
  20. 20. Meaning and definition  Promotion compasses all the tools in the marketing mix whose major role is persuasive communication  Promotion includes advertising, personal selling, sales promotion and other selling tools  Promotion includes every activity which inspires people to buy the goods and services of the company.  Promotion is that marketing activity that attempts to inform and remind individuals and persuade them to accept, resell, recommend or use a product, service, idea or institution.
  21. 21. Characteristics  Constant activity  Information transaction  Differentiating act  Reminding act  Informing act  Persuading act  Human skill  Interpersonal element  Marketing tool  Customer oriented
  22. 22. Objectives of promotion Leads to behavior modification Objective to inform Objective to Remind Specific objectives Objective to persuade
  23. 23. Importance of promotion  Consistency of message delivery  Client relationships  Motivation  Corporate cohesion  Interaction  Participation
  24. 24. Promotion Mix  Promotion mix refers to the combination of various promotional elements viz. advertising, personal selling, publicity and sales promotion techniques used by a business firm to create, maintain and increase demand of the product. It involves an integration of all the above elements of promotion.  A company’s promotional mix includes adverting, personal selling, sales promotion, public relations direct marketing. It also includes product design, shape, package, colour, label etc. as all these communicate something to buyer.
  25. 25. Tools of promotion mix Tools of promotion mix Advertising Publicity Public relations Word-of- mouth Personal Selling Sales Promotion Direct Marketing Online Marketing
  26. 26. Factors affecting promotion Mix Type of product Stage in the product life cycle Company Policy Nature of Market Budget availability Type of product market Buyer readiness stage
  27. 27. Advertising  Advertising is any paid form of non-personal presentation of ideas, goods or services by an identified sponsor  Advertising is any form of paid non-personal presentation of ideas, goods or services for the purpose of inducing people to buy.  An integral part of marketing, adverting are public notices designed to inform and motivate.  Their objective is to change the thinking pattern of the recipient, so that he or she is ersdaed to take the action desired by the advertiser.
  28. 28. Characteristics of adverting  Mass-Communication Process  Informative in action  Persuasive Act  Competitive act  Paid-for  Identified sponsor  Non-Personal Presentation
  29. 29. Objectives of adverting  To increase demand  To sell a new product and to build new brands  To educate the masses  To build brand preferences  To build goodwill  To support salesman  To remind the customers of the product and company  To inform about changes in marketing mix  To enter in new geographical area.
  30. 30. Strengths of adverting  Advantages to manufacturers  Advantages to consumers  Advantages to middlemen  Advantages to society
  31. 31. Advantages to manufacturers  Increased sales  Steady demand  Lower costs  Greater dealer interest  Quick turnover and smaller inventories  Supplementing salesmanship
  32. 32. Advantages to consumer  Facility of purchasing  Improvement in quality  Consumer’s surplus  Education of consumers
  33. 33. Advantages to middleman  It guarantees quick sales  It acts as a salesman  It makes possible retail price maintenance
  34. 34. Advantages to society  Encouragement to research  Sustaining the press  Change in motivation  Encouragement to artists  Glimpse of national life
  35. 35. Weaknesses of Advertising  Multiplication of needs  Misrepresentation of facts  Consumer deficit  Increased cost  Wastage of national resources  Barriers to entry  Product proliferation  Deferred revenue expenditures
  36. 36. Sales promotion  Sales promotion is an exercise in information, persuasion and influence  These marketing activities, other than personal selling, adverting and publicity that stimulate consumer purchasing and dealer effectiveness such as display shows and exhibitions demonstrations and various non-recurrent selling efforts not in the ordinary routine
  37. 37. Characteristics of sales promotion  Irregular/non-recurring activity  Target action  Action focused  Motivation and extra incentive  Acceleration tool  Non-media activity  Strategic role  Planned activity  Means of marketing communication  Element of promotion mix
  38. 38. Difference between sales promotion and advertising BASIS FOR COMPARISON ADVERTISING PROMOTION Meaning Advertising is a technique of driving public attention towards a product or service, through paid network. The set of activities that spread a word about the product, brand or service is known as promotion. What is it? Subset Superset Objective Building brand image and boosting sales. Short term sales push Strategy Promotional strategy Marketing strategy Effects Long term Short term Results Generally slow, can be seen over time. Instant Cost involved Highly expensive Cost Effective Best suited for Medium and big enterprises All enterprises
  39. 39. Objectives of sales promotion  To introduce new products  To attract new customers  To induce present customers to buy more  To help remain competitive  To increase sales in off season  To develop patronage habits among customers  To educate customers  To stimulate sales  To facilitate coordination
  40. 40. Methods of sales promotion Consumer promotion Middlemen promotion
  41. 41. Forms of consumer promotion  Free distribution samples  Coupons  Premiums or bonus offer  Money refund offer  Contests  Cheap bargain or self liquidating premium
  42. 42. Form of middlemen promotion  Buying allowance discount  Buy back allowance  Display and adverting allowance  Dealer listed promotion  Push money  Sales contest  Adverting material  Credit facility
  43. 43. Personal Selling
  44. 44. Meaning and definition  Salesmanship is the power to persuade plenty of people pleasurably to purchase your product at a profit.  The art of presenting and offering that the prospect appreciates the need for it and that a mutually satisfactory sale follows.  It is a part of salesman’s business to create demand by demonstrating that the need does exist although before his visit there was no consciousness of that need.
  45. 45. Characteristics of personal selling  Personal contact with customers  Oral conversation  Quick solution of queries  More expensive approach  More flexible  Slow speed of sales  Receipt of additional information  Real sale  Maintaining the sales records
  46. 46. Objective of personal selling  Building product awareness  Creating interest  Providing information  Stimulating demand  Reinforcing the brand
  47. 47. Strengths of personal selling  Allowing two way interaction  Tailoring of the message  Lack of distraction  Involvement in the decision process  Source of research information.
  48. 48. Weaknesses of personal selling  Inconsistent message  Sales force/ management conflict  High costs  Poor reach  Potential ethical problems
  49. 49. Publicity
  50. 50. Publicity  Publicity is any unpaid form of non-personal presentations of the ideas, goods or services.  Publicity is, any form of non paid commercially significant news or editorial comment about ideas products or institutions  Publicity is defined as the process of drawing attention to a person or thing however, in the world of publishing, publicity refers more correctly to the process of drawing attention to a person or thing for free.
  51. 51. Characteristics of publicity  Credible message  No media cost  Loss of control of publication  Loss of control of content  Loss pf control of timing
  52. 52. Strength of publicity  Low cost  Prevent critic situations  Increase visibility  Get product reviews  Increase perceived worth  Building sales
  53. 53. Weaknesses of publicity  Lack of control  Community concern  Unpredictable  Biased  Negative  repetition
  55. 55. PUBLIC RELATION  Most firm’s in todays environment are not only concerned to customers, suppliers and dealers but also concerned about the effect pf their actions on people outside their target markets.  Public relations are a broad set of communication activities used to create and maintain favourable relations between the organisation and its publics customers, employees, stockholders are officials and society.
  56. 56. Characteristics of public relations  Relatively low cost  Can be targeted  Credibility  Relatively uncontrollable  Saturation of effort
  57. 57. Objective of public relations  Building product awareness  Creating interest  Providing information  Stimulating demand  Reinforcing the brand
  58. 58. Strengths of public relation  Credibility  Low cost  Not compete in other PR tools  Effective
  59. 59. Weaknesses of public relations  May not appear in media  Incapable of link message  Fail to achieve the objectives  Brief life  Incapable of changing perception
  60. 60. Media Management
  61. 61. Media management  The advertising media can be defined as the communication channels used for adverting, including television, radio, the printing press, and outdoor, adverting etc.  Media refers to the channels of communication that carry the message from advertiser to audience.  The communication channels through which message moves from sender to receiver is called media.
  62. 62. Major types of advertising media  Newspaper media  Television media  Radio television  Outdoor adverting media  Direct mail/ direct marketing media  Web/internet advertising media
  63. 63. Criteria for media selection  Communication effectiveness  Geographic selectivity  Audience selectivity  Flexibility  Impact  Prestige  Message life  Coverage
  64. 64. Basic concepts in media selection and management  Reach  Effective reach  Frequency  Effective frequency  Reach versus frequency  continuity