1. INDO GERMAN TRAINING CENTREINDO GERMAN TRAINING CENTRE Prof. MAHAJAN SAMANTProf. MAHAJAN SAMANT developingdeveloping PRICEPRICE

2. INDO GERMAN TRAINING CENTREINDO GERMAN TRAINING CENTRE Prof. MAHAJAN SAMANTProf. MAHAJAN SAMANT Only PriceOnly Price Topmost Lowest 3. INDO GERMAN TRAINING CENTREINDO GERMAN TRAINING CENTRE Prof. MAHAJAN SAMANTProf. MAHAJAN SAMANT 9 Price Quality Strategies9 Price Quality Strategies HIGH MEDIUM LOW HIGHMEDIUMLOW PRICE Q U A L I T Y Premium High Value Super Value Over Charging Medium Value Good Value Rip - Off False Economy Economy 4. INDO GERMAN TRAINING CENTREINDO GERMAN TRAINING CENTRE Prof. MAHAJAN SAMANTProf. MAHAJAN SAMANT Strategies & Programs. . .Strategies & Programs. . . Setting Price Strategy 1 Selecting Price Objective 2 Determining Demand 3 Estimating Costs 4 Analyzing Competitors Costs, Prices & Offers 5 Selecting a Price Method 6 Selecting the Final Price 5. INDO GERMAN TRAINING CENTREINDO GERMAN TRAINING CENTRE Prof. MAHAJAN SAMANTProf. MAHAJAN SAMANT Strategies & Programs. . .Strategies & Programs. . . 1. Selecting Price Objective 1.1 Survival 1.2 Maximum Current Profit 1.3 Maximum Market Skimming 1.4 Product Quality Leadership 6. INDO GERMAN TRAINING CENTREINDO GERMAN TRAINING CENTRE Prof. MAHAJAN SAMANTProf. MAHAJAN SAMANT Strategies & Programs. . .Strategies & Programs. . . 2. Determining Demand (Price Sensitivity) A. Demand Curve Specialist Services Doctors p q Price Quantity Demanded Per Period (a) Inelastic Yarn (Rs.1/- per Kg) p q Quantity Demanded Per Period (b) Elastic Price 7. INDO GERMAN TRAINING CENTREINDO GERMAN TRAINING CENTRE Prof. MAHAJAN SAMANTProf. MAHAJAN SAMANT Strategies & Programs. . .Strategies & Programs. . . 2. Determining Demand (Price Sensitivity) B. Estimate Demand Curve 1. Analyze past prices, quantity sold & other factors. (Tool is statistics & estimate relationships) 2. Price Experiments (a) Bennett & Wilkinson (Vary price in discount store) (b) Different Price in different territories (Usha Fans CASA) (c) Internet e business (Every nth customer) 3. Ask Buyers Purchase Intention at prices (Marketing Research is the tool). 8. INDO GERMAN TRAINING CENTREINDO GERMAN TRAINING CENTRE Prof. MAHAJAN SAMANTProf. MAHAJAN SAMANT Strategies & Programs. . .Strategies & Programs. . . 2. Determining Demand (Price Sensitivity) C. Price Elasticity Mc Kinsey Standards World Economy & Indicator 9. INDO GERMAN TRAINING CENTREINDO GERMAN TRAINING CENTRE Prof. MAHAJAN SAMANTProf. MAHAJAN SAMANT Strategies & Programs. . .Strategies & Programs. . . 3. Estimating Costs A. Production:- Total Cost=Fixed + Variable Cost COST BEHAVIOUR Quantity Produced Per Period (b) Diff. Size Plant Cost per unit 5 0 0 0 1 0 0 0 2 0 0 0 3 0 0 0 4 0 0 0 Quantity Produced Per Period (a) Fixed Size Plant Cost per unit 1000 10. INDO GERMAN TRAINING CENTREINDO GERMAN TRAINING CENTRE Prof. MAHAJAN SAMANTProf. MAHAJAN SAMANT Strategies & Programs. . .Strategies & Programs. . . 3. Estimating Costs Accumulated Production Cost per unit Experience Curve Current Price Experience Curve SO PRICE VOLUME STRATEGY 11. INDO GERMAN TRAINING CENTREINDO GERMAN TRAINING CENTRE Prof. MAHAJAN SAMANTProf. MAHAJAN SAMANT Strategies & Programs. . .Strategies & Programs. . . 3. Estimating Costs B. ACTIVITY ABC Activity Based Costing Say Retailers Purchase Pattern is 1-2-3 or daily OR per week. Now there are various distribution channels for this. 12. INDO GERMAN TRAINING CENTREINDO GERMAN TRAINING CENTRE Prof. MAHAJAN SAMANTProf. MAHAJAN SAMANT Strategies & Programs. . .Strategies & Programs. . . 3. Estimating Costs C. TARGET COSTING Cost = Price Profit (Japan) 13. INDO GERMAN TRAINING CENTREINDO GERMAN TRAINING CENTRE Prof. MAHAJAN SAMANTProf. MAHAJAN SAMANT Strategies & Programs. . .Strategies & Programs. . . 4. Analyzing Competitors Costs, Prices and Special Offers 14. INDO GERMAN TRAINING CENTREINDO GERMAN TRAINING CENTRE Prof. MAHAJAN SAMANTProf. MAHAJAN SAMANT Strategies & Programs. . .Strategies & Programs. . . 5. Selecting a Pricing Method Variable Cost per unit = Rs.10 Fixed Cost = Rs.3,00,000 Expected unit sales = 50,000 Hence Unit Cost = Variable Cost + Fixed Cost Unit Sales = 10 + 3,00,000 = 10 + 6 = Rs.16. 50,000 (say) 20% Mark Up on sales is required Hence Mark up Price = Unit Cost 1-Desired Return on Sales = 16 = Rs. 20/- 1-0.2 5.1. MARK UP PRICING 15. INDO GERMAN TRAINING CENTREINDO GERMAN TRAINING CENTRE Prof. MAHAJAN SAMANTProf. MAHAJAN SAMANT Strategies & Programs. . .Strategies & Programs. . . 5. Selecting a Pricing Method Target Rate of R.O.I is determined. (say) Investment = Rs.10,00,000 Desired x Invested Target Return Price = Unit Cost + Return Capital Unit Sales = 16 + 0.30 X 10,00,000 50,000 = Rs. 22/- 5.2. TARGET RETURN PRICING 16. INDO GERMAN TRAINING CENTREINDO GERMAN TRAINING CENTRE Prof. MAHAJAN SAMANTProf. MAHAJAN SAMANT Strategies & Programs. . .Strategies & Programs. . . 5. Selecting a Pricing Method Look at Break Even Chart Revenue Total Cost Sales Volume in Units Value (Rs.) Fixed Cost 30,000 Break Even Point Break Even Volume = Fixed Cost Price - Var. Cost Unit 3,00,000 20 10 =30,000 17. INDO GERMAN TRAINING CENTREINDO GERMAN TRAINING CENTRE Prof. MAHAJAN SAMANTProf. MAHAJAN SAMANT Strategies & Programs. . .Strategies & Programs. . . 5. Selecting a Pricing Method Made up of Several Elements 5.3. PERCEIVED VALUE PRICING 18. INDO GERMAN TRAINING CENTREINDO GERMAN TRAINING CENTRE Prof. MAHAJAN SAMANTProf. MAHAJAN SAMANT Strategies & Programs. . .Strategies & Programs. . . 5. Selecting a Pricing Method Low price for high quality (strategy . . . . A few Customers) EDLP Every Day Low Price ( Offers) 5.4. VALUE PRICING 19. INDO GERMAN TRAINING CENTREINDO GERMAN TRAINING CENTRE Prof. MAHAJAN SAMANTProf. MAHAJAN SAMANT Strategies & Programs. . .Strategies & Programs. . . 5. Selecting a Pricing Method Based on competitors prices Follow the leader is one theme 5.5. GOING RATE PRICING 20. INDO GERMAN TRAINING CENTREINDO GERMAN TRAINING CENTRE Prof. MAHAJAN SAMANTProf. MAHAJAN SAMANT Strategies & Programs. . .Strategies & Programs. . . 5. Selecting a Pricing Method Growth of Internet + Other factors. 5.6. AUCTION TYPE PRICING 21. INDO GERMAN TRAINING CENTREINDO GERMAN TRAINING CENTRE Prof. MAHAJAN SAMANTProf. MAHAJAN SAMANT Strategies & Programs. . .Strategies & Programs. . . 5. Selecting a Pricing Method Volume Booking + Group Formation 5.7. GROUP PRICING 22. INDO GERMAN TRAINING CENTREINDO GERMAN TRAINING CENTRE Prof. MAHAJAN SAMANTProf. MAHAJAN SAMANT Strategies & Programs. . .Strategies & Programs. . . 5. Selecting a Pricing Method 5.8. CARTEL PRICING 23. INDO GERMAN TRAINING CENTREINDO GERMAN TRAINING CENTRE Prof. MAHAJAN SAMANTProf. MAHAJAN SAMANT Strategies & Programs. . .Strategies & Programs. . . 6. Selecting the Final Price Additional Factors 1. Psychological Pricing 2. Gain & Risk Sharing Pricing (Mutual Funds) 3. Influence of other Marking Mix Elements 4. Company Pricing Policies Adapting the Price (Nett or SPS / APE Effects)