Pricing Decisions

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Information about Pricing Decisions

Published on March 7, 2014

Author: kumarprashantgupta


PRICING Prof Prashant Kumar Gupta Jain College of MBA & MCA

How Consumers arrive at their Perception of Price Reference Prices: 1. Consumers have fair knowledge about the prices 2. But they cannot recall accurate price Price Cues: compared before making purchase decision 3. Prices areInference: Price-Quality is also affected by pricing strategies 1. a. Internal reference price (memory) Perception 1. Consumers use priceodd an indicator of quality 2. b. External reference price (regularDifference in Prices should end in as number. price) 2. When info about true quality is available, price perception of Rs2,999 and Rs3,000. 3. becomes irrelevant‘0’ and ‘5’ are easily remembered. Prices ending with 4. The sign ‘Sale’ also spurs demand. Note: Sellers put their products in expensive class for consumers to believe that it belongs to the same class

Setting The Price Estimating Costs Price Method Demand 1. Accumulated production leads to decline in Determining Selection Setting the price objective 1. Understandexperience Markup Price costs with price sensitivity 1. Survival Analysing Competitor Selecting Final Price 2. Cost Costing Target Return 1. Price Elasticity Price (ROI) activities 2. Maximum current profit 1. Impact of other marketing Perceive demand curves 3. Prices of Value Types 2. Estimatingcost Pricing 3. Maximum market share 2. Company pricing policies 4. Offer Pricing Low Pricing (Big Value a. Statistical Analysis Fixed 3. Maximum Cost oron other parties Bazar) 4. Impact ofmarket skimming 3. price 5. b. Experiments Going Rate Cost ( Competitor’s Price) Variable Pricing 5. Product-Quality leadership 6. c. Surveys Auction Pricing Total Cost 6. Other objectives like cost recovery d. Average Cost

HomeWork • Explain penetration pricing

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