UNIT IV Pricing Meaning Pricing Objectives Factors influencing

UNIT - IV Pricing: Meaning – Pricing Objectives - Factors influencing Pricing decisions – Methods of pricing – Promotion - Objectives - Promotion mix – Forms of Promotion

What Is a Price? Ø Narrowly, Price is the amount of money charged for a product or service. Ø Broadly, Price is the sum of all the values that consumers exchange for the benefits of having or using the product or service. Ø Simply, the exchange of goods or services in terms of money Price = Cost + Profit

Price brings in the revenues Ø This is the only element in the marketing mix that brings in the revenues. All the rest are costs Ø Price communicates the value positioning of the product.

The Pricing Objective Ø Survival Ø Pricing for target return (ROI) Ø Maximum Ø To market share meet or prevent competition Ø Product Ø Profit quality leadership maximization & Resource mobilization Ø Stabilize price Ø Customer’s ability to pay (Ex: Doctors charge)

Factors influencing Pricing decisions Internal Ø Organizational factors Ø Marketing mix Ø Product differentiation Ø Cost of the product Ø Objectives of the firm External Ø Demand Ø Competition Ø Suppliers Ø Economic conditions Ø Buyers Ø Government

Methods (Kinds) of Pricing ØPsychological Ø pricing: Price set at odd amounts as Rs. 19. 95 Customary pricing: Rate & market condition(not by manufacturer) ØSkimming pricing: High introductory price in the initial stage ØPenetration pricing: Low price is designed in the initial stage ØGeographical pricing: Due to distance price may vary ØAdministered pricing: Based on managerial decision ØDual pricing: For Govt. and to open market at a different price ØNegotiated pricing: Specification design by the buyer ØCompetitive bidding: Govt. calls for competitive bids

Promotion is telling and selling l The co-ordination of all seller-initiated efforts to set up channels of information and persuasion to facilitate the sale of goods, or service or the acceptance of an idea.

Objectives l Main purpose of promotion Ø To communicate Ø To convince and Ø To compete l. Four Ø Ø main promotional tools or Mix: Advertising Personal selling Sales promotion Public relations

Forms of Promotion l Advertising: Any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor. l Personal selling: Ø Most effective and the most costly form of promotion. Ø Best means of oral or face to face or direct communication with one or more prospective purchasers for the purpose of making sales.

Forms of Promotion l Sales promotion: marketing activity other than advertising. Publicity and personal selling are known as sales promotion. l Public relations: it creates, develops and maintains a bright image of an organization on the public. Thus good will of the seller increases and leads to promotes the sale of goods l Publicity: it stimulates demand by making publicity in radio or television or stage.

Forms of Promotion l Other methods of promotion l Point of purchase display l Packaging l Direct l mail Other forms of promotion Ø Ø Sampling Couponing