Transcript price as an element of markeeting mix

PRICE AS AN ELEMENT OF
MARKEETING MIX
PRICING DECISIONS-•
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PRICING IS A CRUCIAL ELEMENT AS IT ATTRACTS REVENUES TO THE
FIRM.
THERE ARE THREE MAJOR CRITERIA INVOLVED IN PRICING
DECISIONS—
1. COST(PRICE SHOULD BE COST PLUS INCLUDING DESIRIED
PROFITS)
2. COMPETITION (SURVIVAL)
3. OBJECTIVE—LONG TERM/SHORT TERM –INCREASING MARKET
SHARE, HIGH END IMAGE/BRAND.
PRICING AFFECTS BUYERS’ PERCEPTION OF SERVICE OFFERED.
IF PRICES ARE LOWER CUSTOMERS EXPECTATIONS ARE ALSO
LOWER
SPECIAL PRICING FOR IMMEDIACY OF DELIVERY/IMPORTANCE OF
DELIVERY(SPEED POST/ICU IN HOSPITAL)
PRICING DECISIONS CONTD..
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BRANDING CAN ALLOW DIFFERENTIATION HENCE PREMIUM
PRICING IS POSSIBLE
VALUE IS NOT DETERMINED BY PRICE ALONE BUT THE BUNDLE OF
BENEFITS THE CUSTOMER RECEIVES
PACKAGE PRICE– BUNDLE OF DIFFERENT SERVICES AT SPECIAL
PRICES– (HOTELS, TRANSPORTATION,TOURS)
PRICING OBJECTIVES—
1. SURVIVAL (LOWER PROFITABILITY IN PERIOD OF
RECESSION/TOUGH COMPETITION)
2. PROFIT MAXIMIZATION( SKIMMING PRICING—EARLY STAGE OF
PRODUCT LIFECYCLE)
3. SALES MAXIMISATION( DUMPING –FOR PENETRATION)
4. PRESTIGE– PRODUCT POSITITIONED AS EXCLUSIVE/HIGH END.
5. RETURN ON INVESTMENT
DEMAND VARIATIONS,CAPACITY CONSTRAINTS
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THERE ARE MANY PEAKS AND VALLYES IN DEMAND FOR SERVICES
(BASED ON TIME OF DAY/MONTH/SEASON). SERVICE PROVIDER MAY
FIND IT DIFFICULT TO CATER TO THE PEAK DEMAND. ON THE OTHER
HAND WHEN THERE IS SLACKNESS IN DEMAND THE CAPACITY MAY
REMAIN UNDERUTILISED.
SERVICE PROVIDER MAY USE PRICE AS A TOOL TO MANAGE
DEMAND—PRICE DISCOUNTS OFFERED DURING VALLEYS—
(TELEPHONE CHARGES, MULTIPLEX, HILL STATIONS)
DIFFERENT APPROACH TO PRICING—
EQUIPMENT BASED SERVICES/PEOPLE BASED SERVICES (IF
EQUPMENT BASED CAPITAL COSTS ARE MORE HENCE LARGE
CUSTOMER BASE NECESSARY—LOW PRICING TO REACH BREAKEVEN POINT)
DEGREE OF CUSTOMISATION
SEARCH ELEMENTS DOMINANAT/EXPERIENCE ATTRIBUTE
DOMINANT—CONCESSION FOR FIRST TIME)
SEGMENTATION AND PRICING
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PRICING MUST BE RIGHT FOR THE TARGET SEGMENT
INNOVATIVE PRICING SCHEME FOR YOUR SEGMENT—
EXAMPLE MOBILE INDUSTRY (BSNL PLAN)(TIME SHARING OF
RESORTS ON HILL STATIONS/BEACHES)(DAILY WEEKLY TICKET OF
BUS SERVICE)
• PRICES ARE KNOWN BY DIFFERENT NAMES—
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INTEREST RATES(DEPOSITS)
RENT
FARE (AIR/BUS TRAVEL)
FEES
LOADING (MUTUAL FUND)
TICKET
* BROKERAGE
* COMMISSION
* TOLL
* PREMIUMS (Insurance)
* HONORARIUM
* SERVICE CHARGES.
PRICING METHODS
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1. COST PLUS PRICING
2. RATE OF RETURN PRICING
3. COMPETITIVE PARITY PRICING
4. LOSS LEADING PRICING
5.VALUE BASED PRICING
6. RELATIONSHIP PRICING
7. DIFFERENTIATED PRICING
SPECIAL CONSIDERATIONS
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CONFUSION BASED PRICING—
MANY FREQUENT CHANGES IN PRICING– CONFUSION IN THE MIND
OF CUSTOMEERS-- SOME COMPANIES MAY USE IT AS A STRATEGYEARNING MORE THAN NORMAL PROFITS FOR SHORT PERIOD—
EXAMPLES—CREDIT CARD COMPANIES, MUTUAL FUNDS,
BANKS(CHARGES FOR CHEQUE BOOKS,MINIMUM DEPOSIT
CHARGES)
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PRICING AND CRM
LOYALTY PROGRAMMES (AIRLINES/HOTELS)
PRICING CAN BE SHORT TERM STRATEGY FOR ATTRACTING
CUSTOMERS BUT IN LONG TERM SERVICE QUALITY IS MUST.