2. Price: Concept and Definition
Price has multiple interpretations and definitions one of it that
encompasses the concept of price is as follows:
“Price is amount of money charged for a product or service. It is the
sum of all the values that consumers give up in order to gain the
benefits of having or using a product or service”
“Price is the value placed on what is exchanged. Something of value is
exchanged for satisfaction and utility, includes tangible (functional) and
intangible (prestige) factors.”
PRICE PRICING ROLE AND FUNCTION
3. Price: Concept and Definition
As a concept
“Price is that which is given up in an exchange to acquire a product and
service”
“It is the only element of a generic marketing that relates to revenue all
other parameters relate to costs”
Total Revenue = Price * Quantity
Profits = Total Revenue - Total Cost
PRICE PRICING ROLE AND FUNCTION
4. Pricing: Price Setting; 6 Step Process
Six step process in Pricing
1
• Selecting the price objective
2
• Determining demand
3
• Estimating costs
4
• Analyzing Competitors' Costs, Prices, and Offers
5
• Selecting a pricing method
6
• Selecting the Final Price
PRICE PRICING ROLE AND FUNCTION
5. Pricing
Pricing is the process whereby a business sets the price at which it
will sell its products and services, and may be part of the business's
marketing plan.
A firm sets a price for the first time when
•It develops a new product
•Introduces regular product into a new distribution channel or
geographical area
PRICE PRICING ROLE AND FUNCTION
6. Pricing
A company must set its price in relation to the value delivered and
perceived by the customer
PRICE PRICING ROLE AND FUNCTION
Higher
Price
Lower
Perceived
value
Company
misses
potential
profit
7. Pricing
A company must set its price in relation to the value delivered and
perceived by the customer
PRICE PRICING ROLE AND FUNCTION
Lower Price
Lower
Perceived
value
Company fails
to harvest
potential
profit
8. Price: Price Setting
These are price setting methods considering the motive of the company
“cost-based” is product driven; a summation of costs (Soaps, Daily Bread)
“Value-based” is customer perception driven (Mobile Phones, Apparel)
PRICE PRICING ROLE AND FUNCTION
9. • Signal To The Buyer
• Instrument of Competition
• Improving Financial Performance
• Marketing Program Considerations
Price: Role and Function
PRICE PRICING ROLE AND FUNCTION
10. • Direct way of Communication
• Basis of Comparison between brands
• Positioning the brand
Signal to the Buyer
High Price Positioned as high quality,
technologically advanced product
Low Price product- positioned as
affordable
PRICE PRICING ROLE AND FUNCTION
11. Low Price product- positioned as
affordable smart phone
High Price Positioned as a Luxury Car
Low Price product
High Price product
PRICE PRICING ROLE AND FUNCTION
16. • Impact on Business Financial Statements
Ex:Maggi
Improving Financial Performance
Maggie had to face litigation . It resulted company, net loss in 2
quarters. Company launched the product with an increase of INR 2
PRICE PRICING ROLE AND FUNCTION
17. • Substitution for advertising and sales promotion
• Incentive to channel members
Marketing Program Considerations
Company
Wholesaler
( INR 15)
Retailer
(INR 18)
Customer
(INR 20)
PRICE PRICING ROLE AND FUNCTION
