presentation-product line pricing

8/7/2019 PRESENTATION-Product line pricing

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Managerial Economics

PRESENTATION ON

PRODUCT LINE PRICING


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Presented By

NAME COURSE ROLL NO

MADHUSUDAN HANWAT MMM M091056

SUMIT KADAM MFM F091019VIDULA PARADKAR MHRDM H091030

MANGESH J. PATIL MHRDM H091014

SUJEET KOTHAWALE MFM F091023

RAM VERMA MMM M091043

BABURAO BHADHE MMM M091050

KOMAL KATKADE MHRDM H091009

SATYAVAN RAUNDHAL MMM M091051

MANOJ JADHAV MFM F091015

KANAIYA BAROT MMM M091006


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Product Line

Product lining is the marketing strategy of

offering for sale several related products. Unlikeproduct bundling, where several products arecombined into one, lining involves offeringseveral related products individually.

Price lining is the use of a limited number ofprices for all your product offerings


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Product Line Contd...

Product line concept related to Width andlength of product Mix.

Width of Product Mix

Length of Product Mix


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Product Line Pricing

The setting of prices for all items in a product lineinvolving the lowest-priced product, the highestprice product, and price differentials for all otherproducts in the line.

Example:

Establishing a single price for all products in a

product line, such as having a price of $55 forthe high-priced line of dress shirts, $45 for themedium-priced line, and $35 for the lower-pricedline.


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Product line Pricing Strategy

Product line pricing strategy can be used

when you are in the process of building awhole product line.

Optional -feature pricing

Ancillary product pricing

Twopart pricing

Product bundling pricing


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Contd..

The element which affects Product Line

pricing:

Product life cycle Interdependency of the products

When a product will leave the line

When a new product is scheduled to enter theline.

How the products in line complement eachother.


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Price Discrimination

Practice of charging different customerdifferent prices is Price Discrimination.

Price discrimination is a feature ofmonopolistic and oligopolistic markets, wheremarket power can be exercised.

Necessary Conditions forPrice

Discriminations are

1. The Market must be Segmentable.

2. There is no Resale.


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Contd..

Price Discrimination is profitable if and only ifthe Price elasticity of demand is different in

different Markets. The effects of price discrimination on social

efficiency are unclear; typically such behaviorleads to lower prices for some consumers

and higher prices for others.


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Types of Price Discrimination

First degree price discrimination :

Price varies by customer's willingness or

ability to pay. Second degree price discrimination :

Price varies according to quantity sold.

Third degree price discrimination :Price varies by attributes such as location orby customer segment.


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Contd..

Price skimming :

Company start reducing the price from high to

low. Price skimming is closely related to theconcept of yield management.

Combination :

Company may vary pricing by location bygiving Bulk, Incentives, Seasonal discounts tocustomers.


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Examples of Price Discrimination

Retail price discrimination

Travel industry

Premium pricing Segmentation by age group and student

status

Haggling Dual pricing

Financial aid in education


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Demand Relationship in

Product line

Two Demand characteristics peculiar to

Multiple Product line are

Interdependent of demand for variousproduct of members line.

Product line for market segmentations andprice discriminations.


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Retail Product line pricing

Strategy

Retailer must know how to adjust their pricesin response to various types of cost shocks.

When the costs of specific productcomponents or ingredients change, howshould retailers re-adjust the prices of theaffected product lines?

what will be the impact on profit margins, therange of prices in the line and the averageprice in the line?


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Contd..

If a product is removed, perhaps suddenly,from the line, how should the retailer adjust

the other prices in the line? Answers to this question depends on the

nature of the demand relationships betweenthe variants in the line.


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Alternative Policies

Prices Proportional to Full Cost

Prices Proportional to Incremental Cost

Prices Proportional to Conversion Cost Prices that depend upon the elasticity of

demand of different market segment.

Prices which are related to stage of Marketand competitive development of Individual

members of product line.


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Conclusion

Thus we can conclude that Manufacturersare using product lines as a price

discrimination tool.

We also study the product line selections andthis shows if the degree of competition

increases, prices approach marginal cost.


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