1. Nagle proposition
of pricing
BY-
RAHUL RANJAN -097
CHAITANYA MADHAV- 093
PRABINA MEHER- 095
RAJAT LAKHOTIA- 098
PUNIT AGGARWAL- 096
PAVAN KUMAR HK- 094
RAVI KUMAR POLA -099
2. What is price really ?
Price is that which is given in return for a product in
commercial exchange
Buyersâ View â Price refers to what must be given up to
obtain benefits
Sellersâ View â
price reflects the revenue generated for each product sold
3. Value based pricing
âą It sets prices primarily, but not exclusively, on the value, perceived or estimated,
to the customer rather than on the cost of the product or historical prices
âą Cost-plus pricing is based on the amount of money it takes to produce the
product
âą Companies that offer unique or highly valuable features or services are better
positioned to take advantage of value-based pricing.
âą A company that sells basic, white, 100% cotton athletic socks would probably use
cost-plus pricing, because its product does not have any special features
âą A company that sold sweat-wicking, extra-padded athletic socks could use value-
based pricing
12. 1) Price Framing Effect
âą Customers are more aware, or price sensitive, when they consider the price as a loss
instead of a worthwhile gain.
âą They have greater price sensitivity when the price is paid separately rather than as part of a bundle
18. 2) Reference price Effect
âą When a customer can directly compare the price of a product with a
competitor, price sensitivity increases.
âą Perceived alternatives can vary by buyer segment, by occasion, and other
factors
24. 3) Switching Cost Effect
The higher the product-specific investment a buyer must
make to switch suppliers, the less price sensitive that buyer
is when choosing between alternatives
26. BANK ACCOUNT
ï” Other services like debit card, credit card, net banking account,
Demat account etc. attached to bank account
27. E-MAIL ID & Social networking site
ï” Shifting from one e-mail ID to another will be headache as
many other accounts are linked to it. Same is true with
Facebook.
30. 4) Perceived Risk Effect
âą Buyers are less sensitive to the price when it is difficult to
compare it to potential alternatives
ï” How difficult is it for buyers to compare the offers of
different suppliers?
ï” Are the prices of different suppliers easily comparable?
31. TESLA ROADSTER
ï” Since there are no competitors at present, it is difficult for customer to
compare with other products.
32. INSURANCE FOR AIR TRAVEL
ï” Even though air travel is one of the safest mode of transport,
people buy insurance along with ticket
33. INSTANT COFFEE
ï” Nestle introduced Nescafe in 1990 in India
ï” Housewives avoided it because anyone who buys it was perceived by
society as a poor planner and lazy
34. Online purchase from untrusted
supplier
ï” It is perceived that after sales service is very difficult for online purchases.
ï” So people avoid it even when products are available at lesser price
35. RETAIL STORES
ï” People are shifting to online grocery delivery as buying groceries from retail store
consumes time.
ï” So, customers will be willing to shell out more money in order to save time
36. 5) Size of Expenditure Effect
ï” Buyers are more price sensitive when the expense, accounts
for a large percentage of buyersâ available income or budget
ï” How important is the expenditure (portion of income or
monetary terms) for the buyer?
42. 6) Price-Quality Effect
are less sensitive to price the more that higher prices
gher quality.
s for which this effect is particularly relevant include:
roducts, exclusive products, and products with
cues for quality.
48. 7) Shared Cost Effect
The smaller the portion of the purchase price buyers must pay
for themselves, the less price sensitive they will be.
Does the buyer pay the full cost of the product?
52. 8) End benefit Effect
âą Economically or psychologically important of the
end-benefit from the product.
âą Two Parts:
âą Derived Demand
âą Price Proportion cost
58. End Benefit â psychology
ï” End benefit is also depend on psychological
phenomenon how a buyer perceives the
absolute price, or price difference, in
proportion to the total cost.
61. 9) Perceived fairness Effect
Buyers are more sensitive to the price of a product when the
price is outside the range they perceive as âfairâ or
âreasonableâ given the purchase context.
63. Lack of alternatives
Cost of puff in Raipur is Rs. 10 - 15
Cost of puff in canteen of IIM Raipur is Rs. 20
ï” Cost of one bottle of water at home
ï” Cost of one bottle of water at water scarce town
ï” Cost of one bottle of water in desert area
