eco creators

7/30/2019 Eco Creators

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PRICE STRATERGY AND

PRICE DISCRIMINATION

CREATORS

Aditi 1221042

Aparna 1221043

Sajan 1221027

Sagarnil 1221026

Rohit 1221025


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Pricing strategies

Pricing strategies for products or services encompass

three main ways to improve profits. These are that the

business owner can cut costs or sell more, or find more

profit with a better pricing strategy. When costs are

already at their lowest and sales are hard to find,

adopting a better pricing strategy is a key option to stay

viable.

CREATORS


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Merely raising prices is not always the answer,

especially in a poor economy. Too many businesses

have been lost because they priced themselves out of

the marketplace. On the other hand, too many business

and sales staff leave "money on the table". One

strategy does not fit all, so adopting a pricing strategy

is a learning curve when studying the needs andbehaviours of customers and clients.


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www.themegallery.com

COST BASED PRICING

COST PLUS PRICING

Also called full cost or mark up pricing

The total cost of the product is determined and a certain profit margin

over it.

considered where cost fluctuations occur time to time.

Used in departmental stores


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MARGINAL COST PRICING

The selling price is achieved by covering only the variable costs, fully or

partly recovering the fixed costs.

In stiff competition, it helps to determine how much the price should be

lowered.

Also called break even pricing and target profit pricing..


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COMPETITOR BASED PRICING

SEALED BID PRICING

Each contracting firm discloses its bid in a paper called tender.

person quoting the lower price, other things remaining constant, will get

reward

Faces less loss

Quotes lower than others


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For example :

The firm quoting the lowest price would win the contract but

the problem is that the price quoted by competitors is notknown and lowest is a relative term; hence there is no

certainty of getting the order of supply. To take on sealed bid

pricing a firm must have good capability to predict the

expected prices quoted by key rivals and then offer a lower

rate.


8/24www.themegallery.com

GOING RATE PRICING

Based on what the competitor charges for similar product.

There is a separate market in which the buyer does not prefer an open

market price but demands that the sellers provide their rates in sealed

form, commonly known as tenders.

This may be considered as a case of limited monopsony. This is one of

the most difficult pricing strategies



DEMAND ORIENTED PRICING

PERCEIVED PURPOSE PRICING

Value set according to the preference of product.


Charging different prices to the buyers for same products.

Create market share, meet competition etc.



STRATEGY BASED PRICING

MARKET SKIMMING

Product introduced in present time.

The initial charges are very high.

Technological products

MARKET PENETRATION

Opposite to price skimming.

At initial stage , it puts very low price specially to attain market share


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RETAIL PRICING

Manufacturer suggested retail price (MSRP) is a

common strategy used by the smaller retail shops to

avoid price wars and still maintain a decent profit.Some suppliers have minimum advertised prices but

also suggest the retail pricing. By pricing products with

the suggested retail prices supplied by the vendor, the

retailer is out of the decision-making process. Another

issue with using pre-set prices is that it doesn't allow a

retailer to have an advantage over the competition.

CREATORS


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Everyday low price strategy

Everyday low price ("EDLP") is a pricing

strategy promising consumers a low price without

the need to wait for sale price events orcomparison shop. EDLP saves retail stores the

effort and expense needed to mark down prices in

the store during sale events, and to market these

events; and is believed to generate shopper

loyalty.

CREATORS


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High-Low Pricing

High-low pricing is a type of pricing strategy adopted by

companies, usually small and medium sized retail firms. It is a

type of pricing where a firm charges a high price for an item andlater sell it to customers by giving discounts or through clearance

sales. The basic type of customers for the firms adopting high-

low price will not have a clear idea about what a product's price

would typically be or must have a strong belief that "discount

sales = low price" or they must have strong preference in

purchasing the products sold in this type or by this certain firm.

CREATORS


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Value Pricing

Value based pricing, or Value optimized pricing is

a business strategy. It sets prices primarily, but not

exclusively, on the value, perceived or estimated, to thecustomer rather than on the cost of the product or

historical prices.

Value-based pricing is predicated upon anunderstanding of customer value. In many settings,

gaining this understanding requires primary research.

This may include evaluation of customer operations and

interviews with customer personnel. CREATORS


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An administered price is in general a price which is either set (fixed)

by legal statute or by a standard procedure formulated as an official

policy, instead of being determined directly by supply costs and

market demand. Even if supply and demand conditions change, the

administered price may therefore stay the same, or it may change inthe opposite direction - if e.g. demand falls, the administered price is

kept the same or raised, to subsidize the supplier and protect his

income, or alternatively the price is kept constant to protect the

consumer/purchaser.


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Export pricing is the most important factor in for promoting

export and facing international trade competition. It is

important for the exporter to keep the prices down keeping

in mind all export benefits and expenses. However, there isno fixed formula for successful export pricing and is differ

from exporter to exporter depending upon whether the

exporter is a merchant exporter or a manufacturer exporter

or exporting through a canalising agency.


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Price discrimination is the practice of discriminating among

buyers on the basis of the price charged on the same good.

WHY PRICE DISCRIMINATION

A seller does price discrimination with an objective to earn

maximum revenue.

PREREQUISITES TO PRICE


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CREATORS

PREREQUISITES TO PRICE

DISCRIMINATION

1

MARKET

CONTROL

Market imperfection andcontrol are the

prerequisite to price

discrimination. The

greater the imperfection

,the higher is the

probability of price

discrimination.

2

DIVISION OF

MARKET

Price discrimination ispossible only when the

whole market can be

divided into various

segments ,whereas the

product would be

identical.

3

DIFFERENT PRICE

ELASTICITIES OF

DEMAND INDIFFERENT

MARKETS


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BASES OF PRICE

DISCRIMINATION

Price discrimination can be done on the basis of :

PERSONAL

1. In this the seller discriminates the price on the basis of personal

discrimination.

2. When the seller has direct contact with its customers, it is convenient for

the seller to charge different prices from different customers.

DEMOGRAPHIC

1. When a certain customers charged different on the basis of their age,

ability, caste which is not available to other people it creates a

demographic separation of market.

CREATORS

BASES OF PRICE


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BASES OF PRICE

DISCRIMINATION

NEED

1. Sometimes the price discrimination is done on the basis of need . For e.g.

lawyer charging different fees according to the complexity of the case.

PAYING CAPACITY

1. Sometimes price discrimination is done on the basis of paying capacity of

the consumers.

GEOGRAPHICAL

1. Sometimes price discrimination is done on the basis of geographical area

i.e. people living in different areas are required to pay different price for

the same product.

CREATORS


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BASES OF PRICE

DISCRIMINATION

TIME

1. When a consumer has to pay different price for the same product during

different time.

PURPOSE OF USE

1. Sometimes price discrimination is done on the basis of the purpose for

which the product is being used.

2. For e.g. banks charge different interest on different type of loans.

CREATORS


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CREATORS

DEGREES OF PRICE

DISCRIMINATION

1

FIRST DEGREE

When the seller is able tocharge different prices for

different units of the same

product from the same

consumer, such a practice

is called price

discrimination of first

degree.

2

SECOND DEGREE

when the seller dividesconsumers on the basis of

their paying capacity and

consumer surplus.

3

THIRD DEGREE

When the seller managesto take away only a small

portion of consumer

surplus.


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DEGREES OF PRICE

DICRIMINATION

CREATORS

SECOND DEGREETHIRD DEGREE


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CREATORS

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