Pricing Decisions

Presented By:-
 Neelam Chippa – 05
 Vikas Gole - 14
 Pragya Jain – 22
 Dhanashree Rokde – 41
 Sowmya Shetty - 47
 Jyoti Yadav - 53
 What is PRICE ?

“In the most simplest terms it is the

For example:-
Construction Companies, Lawyers and Accountants etc
typically price by adding a standard markup to their time
and costs.
 Economy Pricing
This is a no frills low price. The cost of marketing
and manufacture are kept at a minimum.
For example:-
Supermarkets often have economy brands for soups,
spaghetti, etc
 Customer-segment pricing
Different customer groups pay different prices for
the same product or services.
For example:-
 Museums often charge a lower admission fee to
students and senior citizens.
 Amusement park and Water parks charge different
price for children's and adults
 Target-Return Pricing
The firm determines the piece that would yield its
targets rate of ROI
For example:-
General Motors has priced its automobiles to achieve a
15% to 20% ROI. Public utilities, which need to make
a fiar, can also use this method.
 Geographical Pricing
different prices for customers in different parts of
the world
For example:-
China is P&G’s largest market. Two-thirds of china’s
population earns less then $25 per month. In 2003, P&G
developed a tiered pricing initiative to help compete
against cheaper local brands.
 Location pricing
The same product is priced differently at different
locations even through the cost of offering it at
each location is the same.
For example:-
A theater varies its seat prices according to audience
preferences for different locations.
Time pricing
Prices are varied by season, day,
or hour. Public utilities vary
energy rates to commercial
users by time of day and
weekend.
For example:-
 Wednesday of Big Bazaar, Hourly
discounts at central, pantaloon.
 Restaurants charge less to “early
bird” consumer, and some hotels
charge less on weekends.
Captive Pricing
Where products have complements,
companies will charge a premium price
where the consumer is captured
For Example:-
 A razor manufacturer will charge a low price
and recoup its margin (and more) from the
sale of the only design of blades which fit the
razor (Gillette razor).
 Camera’s and films (Sony handy cam,
Kodak camera).
 Toner/ink for HP printers.
 All durable goods and accessories.
 Price Skimming
Setting a high price for a new product
to skim maximum revenues layer by
layer from segments willing to pay the
high price.

For Example:-
 Manufacture of digital watches used
this approach in 1970’s.
 Sony VCR, Sony play station 3, Samsung
Corby
 Penetration Pricing
Setting a low price for a new
product in order to attract a large
number of buyers and a large
market share.
For Example:-
 Matsushita, Japanese TV firm entered
in US with penetration strategy. Same is
used by France telecom i.e.: orange and
sky TV.
 DNA news paper, Fuji camera, spice jet
airlines.
Going rate pricing
Going Rate Pricing is a strategy in which the firm
determines the price according to the current
market price.
For example:-
TATA Docomo’s started with the pricing of 1p/sec call
rates, other Cos. Provided same service to their costumers.
 Case study on
BARISTA & CCD
 Barista
 Barista coffee was established in 1999 with the
aim of identifying growth opportunities in the
coffee business.
 Increase in disposable income and global
trends in coffee indicated immense growth
potential in one particular segment.
 Barista exists in over 22 cities, and operates
over 140 outlets nationally.
Barista
 Café Coffee Day
 It was in the golden soil of Chikmagalur that a
traditional family owned a few acres of Coffee
estates, which yielded rich coffee beans.
 Soon Amalgamated Bean Coffee Trading
Company Limited, popularly known as Café
Coffee Day was formed.
 In the early nineties, Café Coffee Day began
exporting coffee to the connoisseurs across
USA, Europe & Japan.
Café Coffee Day
Change in Pricing Strategy of
CCD
Product Bundle Pricing
Here sellers combine several
products in the same package
For Example:-
 Computer package:- PC, monitor,
software, and printer.
 McDonald’s Value Meal:- Burger,
Fries and Drink
 Vacation package:- Flight, hotel and
meals
Value Pricing
This approach is used where
external factors such as recession
or increased competition force
companies to provide 'value'
products and services to retain
sales
For example:-
McDonalds, Wal-Mart, Southwest
airlines
 Promotional Pricing
Temporarily pricing products below the list price or
even below cost
For Example:-
 Mega mart:- Buy 3 get 3 Free
 LUX Soup:- Gold Coin
 All types of Discounts
 Two Part Pricing
Service price are broken into two parts:-
1. Fixed price
2. Variable usage price

For example:-
Pricing by Telephone companies i.e.: Telephone Bill ,
Internet bills
 Product Line Pricing
Where there is a range of product or services the
pricing reflect the benefits of parts of the range

For example:-
Car Washes:- Basic wash
could be $2, wash and
wax $4, and the whole
package $6.
Optional Product Pricing
Companies will attempt to increase the
Amount customer spend once they start
to buy. Optional 'extras' increase the
overall price of the product or service.
For example:-
Airlines will charge for optional extras
such as guaranteeing a window seat or
reserving a row of seats next to each other
 Psychological Pricing
This approach is used when the marketer wants
the consumer to respond on an emotional,
rather than rational basis.
For example:-
Videocon Rs. 888/-, Telecom network’s @ Rs.1 p/sec,
Tata Indicom Std is cheaper then local, Big Bazaar:-
AC at Rs. 501/-
 Competitive pricing
For example:-
In US Levi Strauss faces stiff price competition from
Wrangler and Lee brands. Outside the US Levi's jeans
command premium price.
Image Pricing
Some companies price the same product at two
different level based on image differences. This is
common in the cosmetics and garments industries.
For example:-
Price of soft drinks like Pepsi, coke, sprite, etc varies from
Glass bottle and can’s.
Environmental influences on
Pricing
 Currency fluctuations: Honda shifted
production from Japan to Ohio to avoid raising
prices when the YEN strengthened in the mid
1991’s.
 Inflationary environment: In Peru in the 1980’s
P&G had biweekly increases in detergent prices
by 20 to 30 percent.
 Government controls, subsidies & regulations:
P&G faced price controls in Venezuela in the
late 1980’s receiving only 50% of the price
increases requested
Continued….
 In Europe, government subsidies to agriculture
make it difficult for US distributors to compete
on price.
 Germany’s move towards deregulations
improved market entry for insurance,
telecommunications and air travel industries
 Australian wine industry – an increase in tax to
20 per cent prompted producers to increase
prices in an attempt to retain profitability
Thank You