stra mkg price notes
TRANSCRIPT
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Marketing strategy is
a series of
actions
leading to a sustainable
competitive advantage.
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Marketing Management
PlacePlaceDistributionDistribution
PolicyPolicy
PricePricePricingPricing
PolicyPolicy
PromotionPromotionCommunicationCommunication
PolicyPolicy
ProductProductProductProduct
PolicyPolicy
TargetTarget
MarketMarket
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Nomura deal holds bonus rain
for Lehman Asia Staff:The Japanese financial services majorhas promised attractive retention
bonuses besides maintaining theexisting salary levels for Lehmanemployees across Asia.
Lehman India head Tarun Jotwani alonebeing offered closes to $10 million to
stay.
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PricePrice: The monetary mediumof exchange.
Utility: The attribute thatmakes it capable of wantsatisfaction
Value: The worth in terms ofother products.
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Geographical Perspectives
GeographicGeographicQuestionsQuestions
RegionRegion
LocationLocation PlacePlace
InteractionInteractionMovementMovement
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Importance of Price
Three variables that determine profit:
SalesVolume
SalesVolume
PricePriceX CostCost ProfitProfit- =
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Factors influencing the price
Internal Factors
Cost
Pricing Objective External Factors
Customers
Suppliers Competitors.
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Setting Pricing Policy
1. Selecting the pricingobjective
2. Determining demand
3. Estimating costs
4. Analyzing competitors
costs, prices, and offers
5. Selecting a pricingmethod
6. Selecting final price
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Types of Costs
Total CostsSum of the Fixed and Variable Costs for a Given
Level of Production
Total CostsSum of the Fixed and Variable Costs for a Given
Level of Production
Fixed Costs(Overhead)
Costs that dontvary with sales or
production levels.
Executive SalariesRent
Fixed Costs(Overhead)
Costs that dontvary with sales or
production levels.
Executive SalariesRent
Variable Costs
Costs that do varydirectly with the
level of production.
Raw materials
Variable Costs
Costs that do varydirectly with the
level of production.
Raw materials
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The Three Cs Model
for Price Setting
Costs Competitorsprices andprices ofsubstitutes
Customersassessmentof uniqueproductfeatures
Low Price
No possibleprofit at
this price
High Price
No possibledemand atthis price
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Pricing Methods
Markup Pricing
Target Return Pricing
Perceived Value Pricing Value Pricing
Going-Rate Pricing
Sealed-Bid Pricing.
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Some important pricingdefinitions
Utility: The attributethat makes it capable
of want satisfaction Value: The worth in
terms of other products
Price: The monetarymedium of exchange.
Value Example:Caterpillar
Tractor is $100,000 vs.
Market $90,000$90,000 if equal 7,000 extra durable
6,000 reliability
5,000 service2,000 warranty $110,000 in benefits -
$10,000 discount!
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Promotional Pricing
Loss-leader pricing
Special-event pricing
Cash rebates Low-interest financing
Longer payment terms
Warranties & service contracts Psychological discounting.
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Discriminatory Pricing
Time
Product-form
Customer Segment
Location
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Price-Reaction Program forMeeting a Competitors Price Cut
Has competitorcut his price?
NoNoHold our price
at present level;continue to watch
competitorsprice
Is the pricelikely to
significantlyhurt our sales?
YesYes
Is it likely to bea permanent
price cut?YesYes
By more than 4%Drop price tocompetitors
price
By 2-4%Drop price by
half of thecompetitors
price cut
How much hashis price been
cut?YesYes
NoNo NoNo
By less than 2%Include a
cents-off couponfor the nextpurchase
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Pricing Challenges
Skimming Using high-priced unique products to achieve the
highest possible contribution in a short initial timeperiod, then gradually lowering the price as the market.
Market Pricing
Following competitive pricing in the target market;adjusting production and marketing mix to competitiveconditions.
Penetration Pricing
Offering low pricing to generate volume sales whichhopefully will compensate for low margins.
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Consumer Categories
Category Annual Income Life style
Quality conscious Over Rs. 1,50,001 Very Rich
Value Conscious Rs.45,001-1,50,000 Consuming class
Price Conscious Rs.22,001- Rs.45000 Climbers
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Price in Marketing MixRural
Consumers
Product Price Promotion Place
Quality consciousconcerned withfunctionalbenefits value for
money
PremiumProduct
High High Show rooms,Malls,
Valueconscious Pricesensitiveconcern with
functionalbenefits
Mass Products Medium High General andfancy storespaan shops andhaats
Price conscious Spuriousproducts
Low No Kirana, paanshops and haats
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Videcon :Pricing StrategyVidecon was one of the first companies to
enter the rural market with a plethora ofproducts in the home appliances. It attacksmarket leader Phillips by launching a radio setfor Rs.180(the Phillips radio set cost Rs.250)and grabbed a major chunk of the market.
Low Priced shampooCavinkare realized that for a family of fivemembers at rs.2 per sachet and minimum offour hair washes per person per month would
mean a Rs. 40 spend for a shampoo . Manyrural families cannot be afford expense.
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Operation Bharat: Bundle-Price
StrategyHLL launched a combo pack comprising a Clinic shampoobottle, a tube each of pepsodent and Fair & Lovely ad Pond;sDream Flower Talc for rural areas. HLL provided hampers atdiscounted prices of Rs. 5 Rs.10 and Rs.20 each in differentsizes and combinations. The project was aimed ataddressing issues of consumers awareness, attitudes andhabits As consumers in rural areas were exposed to andbecame familiar with such value added value for moneyalternatives.