Pricing policies

Module 2

Pricing objectives• Market penetration objective• Market skimming objective• Target rate of return objective• Price stabilization objective• Meet or follow competition objective• Market share objective• Profit maximization objective• Cash flow objective• Product line promotion objective• Survival objective

Pricing process

Pricing strategies

Geographical Pricing• Adjusting an item’s sale price based on the buyer's location• Companies will try to gain maximum

revenue in the markets in which it operates

Petrol prices in different cities of India ???Srinagar – Chennai – Hyderabad – Trivananthapuram – Bengaluru – Mumbai – Pondichery – Chandigarh –

Promotional pricing

• Promotional pricing is a sales and marketing technique

• reducing the price of a product or service to attract customers

Discriminatory pricing

sales of identical goods or services transacted at different prices from the same provider

charges customers different prices for the same product or service

1. Age based pricing such as charging less for a child's ticket to a movie theatre/amusement park than an adult.

2. Universities charging more for out-of-state residents.

3. A doctor charging for services based on patients income.

Value Pricing offering a product at a fair and reasonable price that

makes sense to the purchasing customer. As the name itself suggest price of the product/ service is set according to value perceived by the customer

Captive Product Pricing The pricing of supplies, such as razor blades,

staples or computer software, which cannot be used without a companion product

Product Bundle Pricing

combining several products and offering the bundle at a

reduced price Walmart’s “Xbox 360 Super Elite 250GB Bundle,” for

example, includes an Xbox 360 console, Final Fantasy XIII, an Xbox 360 250GB hard drive, 2 Xbox 360 wireless controllers, an Xbox 360 wired headset, an Ethernet cable, a standard definition Xbox 360 composite A/V/ cable, and a Final Fantasy face plate. This package sells at a price of $399.This saves the customer roughly $35 compared to if these items were purchased individually.

Psychological Pricing

a little less than a round number, e.g. $19.99 or £2.98 or Rs.1999/- only

Product Line Pricing

a pricing strategy that uses one product with various class distinctions.

Optional Product Pricing

A method of determining product costs whereby a business sets a low cost for its most basic product and then profits from selling more costly accessories.

Optional product pricing is especially notable in the marketing of products like computer printers that often have a very low initial entry price, while the cost of accessories like AC adaptors and printer ink cartridges is substantial.

Premium Pricing

keeping the price of a product or service artificially high in order to encourage favorable perceptions among buyers, based solely on the price

A luxury flat

Penetration Pricing

A relatively low initial entry price, often lower than the eventual market price, to attract new customers. The strategy works on the expectation that customers will switch to the new brand because of the lower price

Economy Pricing

A valuation technique which assigns a low price to selected products. Economy pricing is widely used in the retail food business for groceries such as canned and frozen goods sold under generic food brands where

marketing and production costs have been kept to a minimum

Price Skimming

when a marketer sets a relatively high price for a product or service at first, then lowers the price over time.

Classroom activity 4

Take the example of any one of the following companies

ITC, TATA, NESTLE, HUL, P & G, AMUL, DABUR, EUREKA FORBES, MAHINDRA & MAHINDRA

Analyze a few brands of the chosen company and examine the pricing strategies