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7/30/2019 Eco Creators
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PRICE STRATERGY AND
PRICE DISCRIMINATION
CREATORS
Aditi 1221042
Aparna 1221043
Sajan 1221027
Sagarnil 1221026
Rohit 1221025
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Pricing strategies
Pricing strategies for products or services encompass
three main ways to improve profits. These are that the
business owner can cut costs or sell more, or find more
profit with a better pricing strategy. When costs are
already at their lowest and sales are hard to find,
adopting a better pricing strategy is a key option to stay
viable.
CREATORS
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Merely raising prices is not always the answer,
especially in a poor economy. Too many businesses
have been lost because they priced themselves out of
the marketplace. On the other hand, too many business
and sales staff leave "money on the table". One
strategy does not fit all, so adopting a pricing strategy
is a learning curve when studying the needs andbehaviours of customers and clients.
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www.themegallery.com
COST BASED PRICING
COST PLUS PRICING
Also called full cost or mark up pricing
The total cost of the product is determined and a certain profit margin
over it.
considered where cost fluctuations occur time to time.
Used in departmental stores
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MARGINAL COST PRICING
The selling price is achieved by covering only the variable costs, fully or
partly recovering the fixed costs.
In stiff competition, it helps to determine how much the price should be
lowered.
Also called break even pricing and target profit pricing..
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COMPETITOR BASED PRICING
SEALED BID PRICING
Each contracting firm discloses its bid in a paper called tender.
person quoting the lower price, other things remaining constant, will get
reward
Faces less loss
Quotes lower than others
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For example :
The firm quoting the lowest price would win the contract but
the problem is that the price quoted by competitors is notknown and lowest is a relative term; hence there is no
certainty of getting the order of supply. To take on sealed bid
pricing a firm must have good capability to predict the
expected prices quoted by key rivals and then offer a lower
rate.
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GOING RATE PRICING
Based on what the competitor charges for similar product.
There is a separate market in which the buyer does not prefer an open
market price but demands that the sellers provide their rates in sealed
form, commonly known as tenders.
This may be considered as a case of limited monopsony. This is one of
the most difficult pricing strategies
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DEMAND ORIENTED PRICING
PERCEIVED PURPOSE PRICING
Value set according to the preference of product.
PRICE DISCRIMINATION
Charging different prices to the buyers for same products.
Create market share, meet competition etc.
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STRATEGY BASED PRICING
MARKET SKIMMING
Product introduced in present time.
The initial charges are very high.
Technological products
MARKET PENETRATION
Opposite to price skimming.
At initial stage , it puts very low price specially to attain market share
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RETAIL PRICING
Manufacturer suggested retail price (MSRP) is a
common strategy used by the smaller retail shops to
avoid price wars and still maintain a decent profit.Some suppliers have minimum advertised prices but
also suggest the retail pricing. By pricing products with
the suggested retail prices supplied by the vendor, the
retailer is out of the decision-making process. Another
issue with using pre-set prices is that it doesn't allow a
retailer to have an advantage over the competition.
CREATORS
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Everyday low price strategy
Everyday low price ("EDLP") is a pricing
strategy promising consumers a low price without
the need to wait for sale price events orcomparison shop. EDLP saves retail stores the
effort and expense needed to mark down prices in
the store during sale events, and to market these
events; and is believed to generate shopper
loyalty.
CREATORS
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High-Low Pricing
High-low pricing is a type of pricing strategy adopted by
companies, usually small and medium sized retail firms. It is a
type of pricing where a firm charges a high price for an item andlater sell it to customers by giving discounts or through clearance
sales. The basic type of customers for the firms adopting high-
low price will not have a clear idea about what a product's price
would typically be or must have a strong belief that "discount
sales = low price" or they must have strong preference in
purchasing the products sold in this type or by this certain firm.
CREATORS
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Value Pricing
Value based pricing, or Value optimized pricing is
a business strategy. It sets prices primarily, but not
exclusively, on the value, perceived or estimated, to thecustomer rather than on the cost of the product or
historical prices.
Value-based pricing is predicated upon anunderstanding of customer value. In many settings,
gaining this understanding requires primary research.
This may include evaluation of customer operations and
interviews with customer personnel. CREATORS
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An administered price is in general a price which is either set (fixed)
by legal statute or by a standard procedure formulated as an official
policy, instead of being determined directly by supply costs and
market demand. Even if supply and demand conditions change, the
administered price may therefore stay the same, or it may change inthe opposite direction - if e.g. demand falls, the administered price is
kept the same or raised, to subsidize the supplier and protect his
income, or alternatively the price is kept constant to protect the
consumer/purchaser.
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Export pricing is the most important factor in for promoting
export and facing international trade competition. It is
important for the exporter to keep the prices down keeping
in mind all export benefits and expenses. However, there isno fixed formula for successful export pricing and is differ
from exporter to exporter depending upon whether the
exporter is a merchant exporter or a manufacturer exporter
or exporting through a canalising agency.
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PRICE DISCRIMINATION
Price discrimination is the practice of discriminating among
buyers on the basis of the price charged on the same good.
WHY PRICE DISCRIMINATION
A seller does price discrimination with an objective to earn
maximum revenue.
PREREQUISITES TO PRICE
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CREATORS
PREREQUISITES TO PRICE
DISCRIMINATION
1
MARKET
CONTROL
Market imperfection andcontrol are the
prerequisite to price
discrimination. The
greater the imperfection
,the higher is the
probability of price
discrimination.
2
DIVISION OF
MARKET
Price discrimination ispossible only when the
whole market can be
divided into various
segments ,whereas the
product would be
identical.
3
DIFFERENT PRICE
ELASTICITIES OF
DEMAND INDIFFERENT
MARKETS
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BASES OF PRICE
DISCRIMINATION
Price discrimination can be done on the basis of :
PERSONAL
1. In this the seller discriminates the price on the basis of personal
discrimination.
2. When the seller has direct contact with its customers, it is convenient for
the seller to charge different prices from different customers.
DEMOGRAPHIC
1. When a certain customers charged different on the basis of their age,
ability, caste which is not available to other people it creates a
demographic separation of market.
CREATORS
BASES OF PRICE
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BASES OF PRICE
DISCRIMINATION
NEED
1. Sometimes the price discrimination is done on the basis of need . For e.g.
lawyer charging different fees according to the complexity of the case.
PAYING CAPACITY
1. Sometimes price discrimination is done on the basis of paying capacity of
the consumers.
GEOGRAPHICAL
1. Sometimes price discrimination is done on the basis of geographical area
i.e. people living in different areas are required to pay different price for
the same product.
CREATORS
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BASES OF PRICE
DISCRIMINATION
TIME
1. When a consumer has to pay different price for the same product during
different time.
PURPOSE OF USE
1. Sometimes price discrimination is done on the basis of the purpose for
which the product is being used.
2. For e.g. banks charge different interest on different type of loans.
CREATORS
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CREATORS
DEGREES OF PRICE
DISCRIMINATION
1
FIRST DEGREE
When the seller is able tocharge different prices for
different units of the same
product from the same
consumer, such a practice
is called price
discrimination of first
degree.
2
SECOND DEGREE
when the seller dividesconsumers on the basis of
their paying capacity and
consumer surplus.
3
THIRD DEGREE
When the seller managesto take away only a small
portion of consumer
surplus.
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DEGREES OF PRICE
DICRIMINATION
CREATORS
SECOND DEGREETHIRD DEGREE
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CREATORS
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