Project Rohit

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A

PROJECT REPORT ON

PRICING STRATEGY OF SONAL ENGINEERING

SUBMITTED TO

UNIVERSITY OF MUMBAI

UNDER THE PARTIAL FULFILLMENT OF

MASTER OF MANAGEMENT STUDIES

SUBMITTED BY

ROHIT SUNIL PRADHAN

M.M.S. MARKETING

UNDER THE GUIDANCE OF

Mr. SWAPNIL BAMBARKAR

PNP

PRABHAKAR PATIL EDUCATION SOCIETY

INSTITUTE OF MANAGEMENT STUDIES

ALIBAG,RAIGAD- 402201


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A

PROJECT REPORT ON

PRICING STRATEGIES

SUBMITTED BY

ROHIT SUNIL PRADHAN

(MARKETING)

2012-2013

In the fulfilment of Summer Internship of University Of Mumbai


INSTITUTE OF MANAGEMENT STUDIES

VESHVI AT- POST, TALUKA- ALIBAG, PIN-402 201


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SONAL ENGINEERING PLASTIC FABRICATOR

ACKNOWLEDGEMENT

I would like to thank our director Dr. Saha for give opportunity to do project. I am also

thankful to Prof. Swapnil Bambarkar of PPES Institute of management studies for his help

encouragement and resourceful guidance.

I would like to thank Mr. Anil Chintaman Mhatre(CEO) of SONAL ENGINEERING

PLASTIC FABRICATOR

for giving me an interesting topic for my project from which I got valuable knowledge.

I would also like to thank Mr. Chintaman Mhatre (product Manager) of SONAL

ENGINEERING PLASTIC FABRICATOR he have supported me a lot for my project.

I am very much thankful to Mr. Arun pokhrankar(Sr. Exc.) of SONAL ENGINEERING

PLASTIC FABRICATOR. He has provided me all the require information for my project.

And also thanks to all my friends for their support and help.

DECLARATION

I, ROHIT SUNIL PRADHAN, student of SY. MMS(Marketing)-3rd semester of



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CONTENTS

SR.NO. PARTICULARS

1 Project title

2 Certificate

3 Declaration

4 Acknowledgement

5 List of table

6 Chapter 1-6.1 Introduction of project

6.2 Executive summary6.3 Project profile

6.4 Importance of study6.5 Objective of study

7 Chapter 2-Company profile

7.1 Introduction of company7.2 Vision, future prospectus

8 8.1 Data introduction8.2 Analysis

8.3 Conclusion

9 Chapter 3-Comparitive analysis

10 Chapter 410.1 Observations

10.2 Findings & suggestions10.3 Conclusions10.4 Bibliography


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Chapter 1

INTRODUCTION TO PROJECT

This project report gives the information about how the company decides the pricing strategy

to get the profit.

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 viable.sales are hard to find,

adopting a better pricing strategy is a key option to stay.

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 and

behaviors of customers and clients.

Pricing strategies for product orservices 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 abetter pricing strategy is a key option to stay viable.

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 and

behaviors of customers and clients.
http://en.wikipedia.org/wiki/Service_%28economics%29http://en.wikipedia.org/wiki/Service_%28economics%29


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.

EXECUTIVE SUMMARY

This project was done at Sonal Engineering Plastic Fabricator(SEPF),Alibag.Pricing

strategies has a significant effect in determining and presenting marketing position and result

of operation to increase the profit.This project helped a lot to understand the pricing strategies

used by the marketing manager.

This project is basically made for understanding the pricing strategies which company used.


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PROJECT PROFILE

Name of Project: Pricing Strategy

Location:

Sonal Engineering Plastic Fabricator

At-Bhaimala

Post-Kamarle

Tal-Alibag

Dist-Raigad

Pproject description:


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MODELS OF PRICING

Cost-plus pricing:

Cost-plus pricing is the simplest pricing method. The firm calculates the cost of producing

the product and adds on a percentage (profit) to that price to give the selling price. Thismethod although simple has two flaws; it takes no account of demand and there is no way of

determining if potential customers will purchase the product at the calculated price.

This appears in two forms, Full cost pricing which takes into consideration both variable and

fixed costs and adds a % markup. The other is Direct cost pricing which is variable costs plus

a % markup, the latter is only used in periods of high competition as this method usually

leads to a loss in the long run.

Creaming or skimming

In most skimming, goods are sold at higher prices so that fewer sales are needed to break

even. Selling a product at a high price, sacrificing high sales to gain a high profit is therefore

"skimming" the market. Skimming is usually employed to reimburse the cost of investment

of the original research into the product: commonly used in electronic markets when a new

range, such as DVD players, are firstly dispatched into the market at a high price. This

strategy is often used to target "early adopters" of a product or service. Early adopters

generally have a relatively lower price-sensitivity - this can be attributed to: their need for the

product outweighing their need to economise; a greater understanding of the product's value;

or simply having a higher disposable income.

This strategy is employed only for a limited duration to recover most of the investment made

to build the product. To gain further market share, a seller must use other pricing tactics such

as economy or penetration. This method can have some setbacks as it could leave the product

at a high price against the competition.

Limit pricing

A limit price is the price set by a monopolist to discourage economic entry into a market, and

is illegal in many countries. The limit price is the price that the entrant would face upon

entering as long as the incumbent firm did not decrease output. The limit price is often lower

than the average cost of production or just low enough to make entering not profitable. The

quantity produced by the incumbent firm to act as a deterrent to entry is usually larger than

would be optimal for a monopolist, but might still produce higher economic profits than

would be earned under perfect competition.

The problem with limit pricing as a strategy is that once the entrant has entered the market,

the quantity used as a threat to deter entry is no longer the incumbent firm's best response.

This means that for limit pricing to be an effective deterrent to entry, the threat must in some

way be made credible. A way to achieve this is for the incumbent firm to constrain itself to

produce a certain quantity whether entry occurs or not. An example of this would be if the


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firm signed a union contract to employ a certain (high) level of labor for a long period of

time. In this strategy price of the product become limit according to budget.

Loss leader

A loss leader or leader is a product sold at a low price (i.e. at cost or below cost) to stimulateother profitable sales. This would help the companies to expand its market share as a whole

Market-oriented pricing

Setting a price based upon analysis and research compiled from the target market. This means

that marketers will set prices depending on the results from the research. For instance if the

competitors are pricing their products at a lower price, then it's up to them to either price their

goods at an above price or below, depending on what the company wants to achieve .

Penetration pricing

Setting the price low in order to attract customers and gain market share. The price will be

raised later once this market share is gained

Price discrimination

Setting a different price for the same product in different segments to the market. For

example, this can be for different classes, such as ages, or for different opening times.

Premium pricing

Premium pricing is the practice of keeping the price of a product or service artificially high in

order to encourage favorable perceptions among buyers, based solely on the price. The

practice is intended to exploit the (not necessarily justifiable) tendency for buyers to assume

that expensive items enjoy an exceptional reputation, are more reliable or desirable, or

represent exceptional quality and distinction.

Predatory pricing

Aggressive pricing (also known as "undercutting") intended to drive out competitors from amarket. It is illegal in some countries.

Contribution margin-based pricing

Contribution margin-based pricing maximizes the profit derived from an individual product,

based on the difference between the product's price and variable costs (the product's

contribution margin per unit), and on ones assumptions regarding the relationship between

the products price and the number of units that can be sold at that price. The product's

contribution to total firm profit (i.e. to operating income) is maximized when a price is

chosen that maximizes the following: (contribution margin per unit) X (number of units sold).

Psychological pricing


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Pricing designed to have a positive psychological impact. For example, selling a product at

$3.95 or $3.99, rather than $4.00.

Dynamic pricing

A flexible pricing mechanism made possible by advances in information technology, andemployed mostly by Internet based companies. By responding to market fluctuations or large

amounts of data gathered from customers - ranging from where they live to what they buy to

how much they have spent on past purchases - dynamic pricing allows online companies to

adjust the prices of identical goods to correspond to a customers willingness to pay. The

airline industry is often cited asicing success story. In fact, it employs the technique so

artfully that most of the passengers on any given airplane have paid different ticket prices for

the same flight.

Price leadership

An observation made of oligopolistic business behavior in which one company, usually the

dominant competitor among several, leads the way in determining prices, the others soon

following. The context is a state of limited competition, in which a market is shared by a

small number of producers or sellers.

Target pricing

Pricing method whereby the selling price of a product is calculated to produce a particular

rate of return on investment for a specific volume of production. The target pricing method is

used most often by public utilities, like electric and gas companies, and companies whosecapital investment is high, like automobile manufacturers.

Target pricing is not useful for companies whose capital investment is low because,

according to this formula, the selling price will be understated. Also the target pricing method

is not keyed to the demand for the product, and if the entire volume is not sold, a company

might sustain an overall budgetary loss on the product.

Absorption pricing

Method of pricing in which all costs are recovered. The price of the product includes the

variable cost of each item plus a proportionate amount of the fixed costs and is a form of

cost-plus pricing.

High-low pricing

Method of pricing for an organization where the goods or services offered by the organization

are regularly priced higher than competitors, but through promotions, advertisements, and or

coupons, lower prices are offered on key items. The lower promotional prices are designed to

bring customers to the organization where the customer is offered the promotional product as

well as the regular higher priced products.

Premium decoy pricing


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Method of pricing where an organization artificially sets one product price high, in order to

boost sales of a lower priced product.

Marginal-cost pricing

In business, the practice of setting the price of a product to equal the extra cost of producingan extra unit of output. By this policy, a producer charges, for each product unit sold, only the

addition to total cost resulting from materials and direct labor. Businesses often set prices

close to marginal cost during periods of poor sales. If, for example, an item has a marginal

cost of $1.00 and a normal selling price is $2.00, the firm selling the item might wish to

lower the price to $1.10 if demand has waned. The business would choose this approach

because the incremental profit of 10 cents from the transaction is better than no sale at all.

Value-based pricing

Pricing a product based on the value the product has for the customer and not on its costs ofproduction or any other factor.


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Nine Laws of Price Sensitivity and Consumer Psychology

They are:

1. Reference Price Effectbuyers price sensitivity for a given product increases the

higher the products price relative to perceived alternatives. Perceived alternatives can varyby buyer segment, by occasion, and other factors.

2. Difficult Comparison Effectbuyers are less sensitive to the price of a known or

more reputable product when they have difficulty comparing it to potential alternatives.

3. Switching Costs Effectthe higher the product-specific investment a buyer must

make to switch suppliers, the less price sensitive that buyer is when choosing between

alternatives.

4. Price-Quality Effectbuyers are less sensitive to price the more that higher prices

signal higher quality. Products for which this effect is particularly relevant include: image

products, exclusive products, and products with minimal cues for quality.

5. Expenditure Effectbuyers are more price sensitive when the expense accounts for a

large percentage of buyers available income or budget.

6. End-Benefit Effectthe effect refers to the relationship a given purchase has to a

larger overall benefit, and is divided into two parts: Derived demand: The more sensitive

buyers are to the price of the end benefit, the more sensitive they will be to the prices of those

products that contribute to that benefit. Price proportion cost: The price proportion cost refers

to the percent of the total cost of the end benefit accounted for by a given component that

helps to produce the end benefit (e.g., think CPU and PCs). The smaller the given

components share of the total cost of the end benefit, the less sensitive buyers will be to the

component's price.

7. Shared-cost Effectthe smaller the portion of the purchase price buyers must pay for

themselves, the less price sensitive they will be.

8. Fairness Effectbuyers are more sensitive to the price of a product when the price is

outside the range they perceive as fair or reasonable given the purchase context.

9. The Framing Effectbuyers are more price sensitive when they perceive the price as

a loss rather than a forgone gain, and they have greater price sensitivity when the price is paid

separately rather than as part of a bundle.


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Marketing - Pricing approaches and strategies

There are three main approaches a business takes to setting price:

Cost-based pricing: price is determined by adding a profit element on top of the cost of

making the product.

Customer-based pricing: where prices are determined by what a firm believes customers will

be prepared to pay

Competitor-based pricing: where competitor prices are the main influence on the price set

Lets take a brief look at each of these approaches;

Cost based pricing

This involves setting a price by adding a fixed amount or percentage to the cost of making orbuying the product. In some ways this is quite an old-fashioned and somewhat discredited

pricing strategy, although it is still widely used.

After all, customers are not too bothered what it cost to make the productthey are interested

in what value the product provides them.

Cost-plus (or mark-up) pricing is widely used in retailing, where the retailer wants to know

with some certainty what the gross profit margin of each sale will be. An advantage of this

approach is that the business will know that its costs are being covered. The main

disadvantage is that cost-plus pricing may lead to products that are priced un-competitively.

Here is an example of cost-plus pricing, where a business wishes to ensure that it makes an

additional 50 of profit on top of the unit cost of production.

Unit cost 100

Mark-up 50%

Selling price 150

How high should the mark-up percentage be? That largely depends on the normal

competitive practice in a market and also whether the resulting price is acceptable to

customers.

In the UK a standard retail mark-up is 2.4 times the cost the retailer pays to its supplier

(normally a wholesaler). So, if the wholesale cost of a product is 10 per unit, the retailer

will look to sell it for 2.4x 10 = 24. This is equal to a total mark-up of 14 (i.e. the selling

price of 24 less the bought cost of 10).

The main advantage of cost-based pricing is that selling prices are relatively easy to calculate.

If the mark-up percentage is applied consistently across product ranges, then the business can

also predict more reliably what the overall profit margin will be.


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Customer-based pricing

Penetration pricing

You often see the tagline special introductory offer the classic sign of penetration pricing.

The aim of penetration pricing is usually to increase market share of a product, providing theopportunity to increase price once this objective has been achieved.

Penetration pricing is the pricing technique of setting a relatively low initial entry price,

usually lower than the intended established price, to attract new customers. The strategy aims

to encourage customers to switch to the new product because of the lower price.

Penetration pricing is most commonly associated with a marketing objective of increasing

market share or sales volume. In the short term, penetration pricing is likely to result in

lower profits than would be the case if price were set higher. However, there are some

significant benefits to long-term profitability of having a higher market share, so the pricingstrategy can often be justified.

Penetration pricing is often used to support the launch of a new product, and works best when

a product enters a market with relatively little product differentiation and where demand is

price elasticso a lower price than rival products is a competitive weapon.

Price skimming

Skimming involves setting a high price before other competitors come into the market. This

is often used for the launch of a new product which faces little or no competitionusually

due to some technological features. Such products are often bought by early adopters who

are prepared to pay a higher price to have the latest or best product in the market.

Good examples of price skimming include innovative electronic products, such as the Apple

iPad and Sony PlayStation 3.

There are some other problems and challenges with this approach:

Price skimming as a strategy cannot last for long, as competitors soon launch rival products

which put pressure on the price (e.g. the launch of rival products to the iPhone or iPod).

Distribution (place) can also be a challenge for an innovative new product. It may be

necessary to give retailers higher margins to convince them to stock the product, reducing the

improved margins that can be delivered by price skimming.

A final problem is that by price skimming, a firm may slow down the volume growth of

demand for the product. This can give competitors more time to develop alternative products

ready for the time when market demand (measured in volume) is strongest.

Loss leaders

The use of loss leaders is a method of sales promotion. A loss leader is a product pricedbelow cost-price in order to attract consumers into a shop or online store. The purpose of


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making a product a loss leader is to encourage customers to make further purchases of

profitable goods while they are in the shop. But does this strategy work?

Pricing is a key competitive weapon and a very flexible part of the marketing mix.

If a business undercuts its competitors on price, new customers may be attracted and existingcustomers may become more loyal. So, using a loss leader can help drive customer loyalty.

One risk of using a loss leader is that customers may take the opportunity to bulk-buy. If

the price discount is sufficiently deep, then it makes sense for customers to buy as much as

they can (assuming the product is not perishable).

Using a loss leader is essentially a short-term pricing tactic for any one product. Customers

will soon get used to the tactic, so it makes sense to change the loss leader or its

merchandising every so often.

Predatory pricing (note: this is illegal)

With predatory pricing, prices are deliberately set very low by a dominant competitor in the

market in order to restrict or prevent competition. The price set might even be free, or lead to

losses by the predator. Whatever the approach, predatory pricing is illegal under competition

law.

Psychological pricing

Sometimes prices are set at what seem to be unusual price points. For example, why are

DVDs priced at 12.99 or 14.99? The answer is the perceived price barriers that customersmay have. They will buy something for 9.99, but think that 10 is a little too much. So a

price that is one pence lower can make the difference between closing the sale, or not!

The aim of psychological pricing is to make the customer believe the product is cheaper than

it really is. Pricing in this way is intended to attract customers who are looking for value.

Competitor-based pricing

If there is strong competition in a market, customers are faced with a wide choice of who to

buy from. They may buy from the cheapest provider or perhaps from the one which offers the

best customer service. But customers will certainly be mindful of what is a reasonable or

normal price in the market.

Most firms in a competitive market do not have sufficient power to be able to set prices

above their competitors. They tend to use going-rate pricing i.e. setting a price that is in

line with the prices charged by direct competitors. In effect such businesses are price-

takers they must accept the going market price as determined by the forces of demand and

supply.

An advantage of using competitive pricing is that selling prices should be line with rivals, so

price should not be a competitive disadvantage.


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Pricing based on Marketing Mix stratyegys

One of the four major elements of the marketing mix is price. Pricing is an important

strategic issue because it is related to product positioning. Furthermore, pricing affects other

marketing mix elements such as product features, channel decisions, and promotion.

While there is no single recipe to determine pricing, the following is a general sequence of

steps that might be followed for developing the pricing of a new product:

1. Develop marketing strategy - perform marketing analysis, segmentation, targeting,

and positioning.

2. Make marketing mix decisions - define the product, distribution, and promotional

tactics.

3. Estimate the demand curve - understand how quantity demanded varies with price.

4. Calculate cost - include fixed and variable costs associated with the product.

5. Understand environmental factors - evaluate likely competitor actions, understand

legal constraints, etc.

6. Set pricing objectives - for example, profit maximization, revenue maximization, or

price stabilization (status quo).

7. Determine pricing - using information collected in the above steps, select a pricing

method, develop the pricing structure, and define discounts.

These steps are interrelated and are not necessarily performed in the above order.

Nonetheless, the above list serves to present a starting framework.

Marketing Strategy and the Marketing Mix

Before the product is developed, the marketing strategy is formulated, including target market

selection and product positioning. There usually is a tradeoff between product quality and

price, so price is an important variable in positioning.

Because of inherent tradeoffs between marketing mix elements, pricing will depend on otherproduct, distribution, and promotion decisions.

Estimate the Demand Curve

Because there is a relationship between price and quantity demanded, it is important to

understand the impact of pricing on sales by estimating the demand curve for the product.

For existing products, experiments can be performed at prices above and below the current

price in order to determine the price elasticity of demand. Inelastic demand indicates that

price increases might be feasible.

Calculate Costs


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If the firm has decided to launch the product, there likely is at least a basic understanding of

the costs involved, otherwise, there might be no profit to be made. The unit cost of the

product sets the lower limit of what the firm might charge, and determines the profit margin

at higher prices.

The total unit cost of a producing a product is composed of the variable cost of producing

each additional unit and fixed costs that are incurred regardless of the quantity produced. The

pricing policy should consider both types of costs.

Environmental Factors

Pricing must take into account the competitive and legal environment in which the company

operates. From a competitive standpoint, the firm must consider the implications of its

pricing on the pricing decisions of competitors. For example, setting the price too low may

risk a price war that may not be in the best interest of either side. Setting the price too high

may attract a large number of competitors who want to share in the profits.

From a legal standpoint, a firm is not free to price its products at any level it chooses. For

example, there may be price controls that prohibit pricing a product too high. Pricing it too

low may be considered predatory pricing or "dumping" in the case of international trade.

Offering a different price for different consumers may violate laws against price

discrimination. Finally, collusion with competitors to fix prices at an agreed level is illegal in

many countries.

Pricing Objectives

The firm's pricing objectives must be identified in order to determine the optimal pricing.

Common objectives include the following:

Current profit maximization - seeks to maximize current profit, taking into account

revenue and costs. Current profit maximization may not be the best objective if it results in

lower long-term profits.

Current revenue maximization - seeks to maximize current revenue with no regard to

profit margins. The underlying objective often is to maximize long-term profits by increasing

market share and lowering costs.

Maximize quantity - seeks to maximize the number of units sold or the number of

customers served in order to decrease long-term costs as predicted by the experience curve.

Maximize profit margin - attempts to maximize the unit profit margin, recognizing

that quantities will be low.

Quality leadership - use price to signal high quality in an attempt to position the

product as the quality leader.

Partial cost recovery - an organization that has other revenue sources may seek onlypartial cost recovery.


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Survival - in situations such as market decline and overcapacity, the goal may be to

select a price that will cover costs and permit the firm to remain in the market. In this case,

survival may take a priority over profits, so this objective is considered temporary.

Status quo - the firm may seek price stabilization in order to avoid price wars and

maintain a moderate but stable level of profit.

For new products, the pricing objective often is either to maximize profit margin or to

maximize quantity (market share). To meet these objectives, skim pricing and penetration

pricing strategies often are employed. Joel Dean discussed these pricing policies in his classic

HBR article entitled, Pricing Policies for New Products.

Skim pricing attempts to "skim the cream" off the top of the market by setting a high price

and selling to those customers who are less price sensitive. Skimming is a strategy used to

pursue the objective of profit margin maximization.

Skimming is most appropriate when:

Demand is expected to be relatively inelastic; that is, the customers are not highly

price sensitive.

Large cost savings are not expected at high volumes, or it is difficult to predict the

cost savings that would be achieved at high volume.

The company does not have the resources to finance the large capital expenditures

necessary for high volume production with initially low profit margins.

Penetration pricing pursues the objective of quantity maximization by means of a low price.

It is most appropriate when:

Demand is expected to be highly elastic; that is, customers are price sensitive and the

quantity demanded will increase significantly as price declines.

Large decreases in cost are expected as cumulative volume increases.

The product is of the nature of something that can gain mass appeal fairly quickly.

There is a threat of impending competition.

As the product lifecycle progresses, there likely will be changes in the demand curve and

costs. As such, the pricing policy should be reevaluated over time.

The pricing objective depends on many factors including production cost, existence of

economies of scale, barriers to entry, product differentiation, rate of product diffusion, the

firm's resources, and the product's anticipated price elasticity of demand.

Pricing Methods

To set the specific price level that achieves their pricing objectives, managers may make use

of several pricing methods. These methods include:


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Cost-plus pricing - set the price at the production cost plus a certain profit margin.

Target return pricing - set the price to achieve a target return-on-investment.

Value-based pricing - base the price on the effective value to the customer relative to

alternative products.

Psychological pricing - base the price on factors such as signals of product quality,

popular price points, and what the consumer perceives to be fair.

In addition to setting the price level, managers have the opportunity to design innovative

pricing models that better meet the needs of both the firm and its customers. For example,

software traditionally was purchased as a product in which customers made a one-time

payment and then owned a perpetual license to the software. Many software suppliers have

changed their pricing to a subscription model in which the customer subscribes for a set

period of time, such as one year. Afterwards, the subscription must be renewed or thesoftware no longer will function. This model offers stability to both the supplier and the

customer since it reduces the large swings in software investment cycles.

Price Discounts

The normally quoted price to end users is known as the list price. This price usually is

discounted for distribution channel members and some end users. There are several types of

discounts, as outlined below.

Quantity discount - offered to customers who purchase in large quantities.

Cumulative quantity discount - a discount that increases as the cumulative quantity

increases. Cumulative discounts may be offered to resellers who purchase large quantities

over time but who do not wish to place large individual orders.

Seasonal discount - based on the time that the purchase is made and designed to

reduce seasonal variation in sales. For example, the travel industry offers much lower off-

season rates. Such discounts do not have to be based on time of the year; they also can be

based on day of the week or time of the day, such as pricing offered by long distance and

wireless service providers.

Cash discount - extended to customers who pay their bill before a specified date.

Trade discount - a functional discount offered to channel members for performing

their roles. For example, a trade discount may be offered to a small retailer who may not

purchase in quantity but nonetheless performs the important retail function.

Promotional discount - a short-term discounted price offered to stimulate sales.


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CHAPTER-2

COMPANY PROFILE

Name: SONAL ENGINEERING PLASTIC FABRICATOR

Business Philosophy of SEPF

Enhance performance of existing business

Explore the new opportunities

Hunt new fields of business activities

Business Status of SEPF

SEPF is a largest manufacturer of FRP gratings in India.

SEPF is known for its best quality of storage tanks and chemical processing equipments.

SEPF had supplied various FRP industrial products to every leading corporate of India.

SEPF got sizeable export business since last 6 years.

SEPF is only organization who got ISO 9000:2008 standard in Alibag tahasil.

Core area of business Operations in:

Manufacturing of GRP and FRP industrial product.

Service provider of repair maintainance, erection installation and annual rate contracts.

Turn key projects.

Designing and manufacturing of special purpose FRP equipments.


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Main Clients of the company:

TATA Steel limited

Tata Steel Limited (BSE: 500470) (formerly Tata Iron and Steel Company Limited,

abbreviated as TISCO) is an Indian multinational steel-making company headquartered inMumbai, Maharashtra, India, and a subsidiary of the Tata Group. Its marketing headquarter is

located at Tata Centre in Kolkata, West Bengal. It is the twelfth-largest steel producing

company in the world, with an annual crude steel capacity of 23.5 million tonnes, and the

largest private-sector steel company in India measured by domestic production

Reliance Industries limited

Reliance Industries Limited (RIL) (BSE: 500325, NSE: RELIANCE, LSE: RIGD) is an

Indian conglomerate company headquartered in Mumbai, Maharashtra, India. The company

operates through three business segments: petrochemicals, refining, and oil and gas; other

divisions of the company include textiles, retail business, special economic zone (SEZ)

development and telecom/broadband business. RIL is one of the largest publicly traded

company in India by market capitalisation and is the second largest company in India by

revenue after Indian Oil Corporation.[2] It is also India's largest private sector company by

revenue and profit. The company is ranked 99th on Fortune Global 500 list of the world's

biggest corporations for the year 2012.

ESSAR Steel limited

Essar Steel is one of the leaders in the country and abroad in the steel sector. The company

has a number of international centres like the Minnesota Steel LLC, a company located in the

USA, Algoma Steel in Canada, Greenfield projects in Vietnam, Steel plant in Indonesia, and

Integrated steel plant Trinidad and Tobago.[4] It has a current capacity of 8.6 million tonnes

which they plan to raise to 14 mt by 2011-12


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ONGC

Oil and Natural Gas Corporation Limited (ONGC) (NSE: ONGC, BSE: 500312) is an Indian

multinational oil and gas company headquartered in Dehradun, India. It is one of the largestAsia-based oil and gas exploration and production companies, and produces around 77% of

India's crude oil (equivalent to around 30% of the country's total demand) and around 81% of

its natural gas.[2] It is one of the largest publicly traded companies by market capitalization

in India.[3] ONGC has been ranked 357th in the Fortune Global 500 list of the world's

biggest corporations for the year 2012.[1] It is also among the Top 250 Global Energy

Company by Platts.[4]

ONGC was founded on 14 August 1956 by the Indian state, which currently holds a 74.14%

equity stake. It is involved in exploring for and exploiting hydrocarbons in 26 sedimentary

basins of India, and owns and operates over 11,000 kilometers of pipelines in the country. Itsinternational subsidiary ONGC Videsh currently has projects in 15 countries

RCF limited

Rashtriya Chemicals & Fertilizers Ltd. (RCF) (BSE: 524230)is a PSU (Public Sector

Undertaking) in India under the Ministry of Chemicals and Fertilizers, Government of India

based in Mumbai[2]. RCF is one of the leading producers of fertilizers in India and is a

Miniratna company, a status awarded by the Government of India.

Uttam Galva Steel limited

Uttam Galva Steels Ltd) is one of the largest manufacturers of cold rolled steel and

galvanized steel in Western India. The company business of procuring hot rolled steel and

processing it into CR and further into GP and Colour Coated Coils

JSW

JSW Steel Ltd: is an Indian steel company owned by the JSW Group based in Mumbai,

Maharashtra, India JSW Steel is among India's largest steel producers, with a capacity of 10

MT as of 2011.

Sajjan Jindal led enterprise JSW Group is one of the largest business conglomerates in India

with a strong presence in the core economic sector. It had grown from a steel rolling mill in

1982 and is presently a multi business conglomerate worth US$5 billion.


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Aquapharm Chemical Pvt. Limited

Incorporated in 1977 with the primary objective of manufacturing 'Desalting Kits' for the

Indian Armed Forces.

Product range expanded to include basic chemicals like Phosphonates, Biocides and LowMolecular Weight Polymers in addition to Water Treatment chemicals and services.

Leading Water Treatment service provider in India for more than a decadeWater Treatment

division sold in 1998 to Aquazur Ltd., U.K., a division of Nalco Chemicals, USA.

Excel Industries limited

Since its inception in 1941, Excel Industries Limited has been known as a pioneer in the area

of crop protection chemicals for the Industry as well as the farming community. Today it hassuccessfully leveraged its strengths to emerge as a leader in a range of speciality and

performance chemicals

Thermax limited

Thermax. D Ltd. is an Indian energy and environment engineering company based in India;

and in Britain. It manufactures boilers, vapours absorption machines, offers water and waste

solutions and installs captive power projects. Thermax is also a historic brand name of

boilers, and the name of a former toughened-glass company.


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Competitors for SEPF

Sant Mechanical Industries Pvt. Ltd.

Cost-plus pricing: pricing is the simplest pricing method. The firm calculates the cost of

producing the product and adds on a percentage (profit) to that price selling price.

Skimming: In most skimming, goods are sold at higher prices so that fewer sales are needed

to break even.

Ansari Industries

Limit pricing: A limit price is the price set by a monopolist to discourage economic entry into

a market, and is iilegal in many contries.

Loss leader: A loss leader or leader is a product sold at a low price (i.e. at cost or below cost)

to stimulate other profitable sales. This would help the companies to expand its market share

as a whole.

Mohan Polymer

Market-oriented pricing: Setting a price based upon analysis and research compiled from the

target market. This means that marketers will set prices depending on the results from the

research.

Penetration pricing: Setting the price low in order to attract customers and gain market share.

The price will be raised later once this market share is gained.

Plastic Engineering Works

Price discrimination: Setting a different price for the same product in different segments to

the market. For example, this can be for different classes, such as ages, or for different

opening times.


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Premium pricing: Premium pricing is the practice of keeping the price of a product or service

artificially high in order to encourage favorable perceptions among buyers, based solely on

the price.

Perfect Plastic Fabricator

Predatory pricing: Aggressive pricing intended to drive out competitors from a market. It is

illegal in some countries.

Contribution margin-based pricing: Contribution margin-based pricing maximizes the profit

derived from an individual product, based on the difference between the product's price and

variable costs


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History of SEPF:

SONAL ENGINEERING PLASTIC FABRICATOR situated at Bhaimala, Post- Kamarle,

Taluka- Alibag, District- Raigad. This is the proprietory concerned established in the year

1997. Mrs. Ankita Anil Mhatre is the proprietor of the company.

Mr.Anil Chintaman Mhatre is the CEO of the company who is looking after designing of

FRP industrial products. He is also involved in marketing as well as production.

The company produced various FRP industrial products such as Storage tanks, Gratings,

Cable trays and Chemical process equipments.

Safety:

Safety is important for every industry rules must be obeyed by everyone in the industry to

avoid harmful hazard. Each company has safety manager. Safety manager and supervisor

maintain safety environment and employees as well as factory, the safety culture in SEPF is

one of its kind has been developed looking into many potential hazard of manufacturing

industry.

PERSONAL PROTECTIVE EQUIPMENTS:

GAS MASK:

Gas mask is provided with suitable absorbing chemical. This chemical absorbs exile gases

and alloy only to oxygen. They filters the gases which dangerous for breathing.

DUST MASK:

It protects respiratory system from harmful chemical for breathing.

APRON:

Apron is used for protective of body and clothes clean. Aprons are made up of differentmaterial like PVC, cotton, rubber etc.


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HAND GLOVES:

Hand gloves are used for protective hand from heat chemical cut etc. The rubber hand gloves

and PVC hand gloves used for hazard chemical handling.

GOGGLES:

Goggles are used for protecting eyes from heat chemical dust etc.

HELMET:

Helmet is used for protecting of head.

EAR PLUG:

Ear plug are used for safety of the ear from the high noise in the industries.

SAFETY SHOES:

Safety shoes are for protection of the feet and lags from heat, electricity and feeling any hard

material on the leg.

TO BE ASSURED BEFORE EXECUTION OF JOBS:

Wind direction

Fire extinguisher

Manual call point

Loud phone safety shower work carried out


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\

CARE TO BE TAKEN BY EMPLOYEES:

Understanding the job properly before working on it.

Learn carefully the chemical used their hazard properties.

Read and understanding notice board around factory.

Used apron, helmet, safety goggles, gas mask, safety belts whenever necessary.

Safety away from drug while working.

Total manpower of SONAL ENGG.PLASTIC FABRICATOR is about 102 personeles from

management to workers.

Supervisory(Technical) 07

Supervisory(Non-Technical) 04Skilled Workers 47

Unskilled Workers 54

Besides this to do various jobs organization depute the contractor for extra manpower.

Raw Material Information:

Raw material contain RESIN and GLASS-FIBRE.

The resin is having various types of Grades.As well as glass fibres had various forms such asglass mat,rowing threads,choppes and surface rowing.

Besides this some sort of chemical and bondings are applied as per requirements.

For sake of various colours pigments and dyes are used with resin.According to design

haredwares are used for finished products.

Products and Uses:

1.FRP gratings.FRP gratings are used as flowring in multifloored plant.It is also used as a

steps for stair cases.


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2.FRP Cable trays. FRP Cable trays are used to carry electrical cables in industrial plant.

3. FRP Storage tank. Many chemical plants are using to store chemicals with FRP storage

tank.

4.Various chemical process equipments.According to requirement of client, SEPF designedand manufactured various chemical equipments.

MARKETING STRATEGY OF SONAL ENGINEERING

Sonal engineering plastic fabricator is the manufacturer of Fibre Reinforced Plastic product

which are of industrial application, such as Cable trays, Gratings, Storage tanks, Structures,

Vessels, Processing equipments etc. Our clients are from various industries such as Chemical

industry, Pharmaceutical industry, Steel industry, Fertilizer industry, Oil explorer industry.

Our products are used for industrial purpose which could be very special. Naturally the

specification could be vary customer to customer. We are manufacturing various products as

per designs of our client. In short our products are tailormade. As to requirement and

specification of client, it is to be manufactured.

As our products are industrial and of special purpose, the marketing strategy is entirely

different than, consumer commercial products. We produce product which are having large

categories and different specification as per the requirement of clients. Where as consumer

products are manufactured in single category at large scale. Hence they have to design their

marketing strategy to sell large quantity of their products in open market which size is alsolarge. The utility of our product is restricted to single client, where as utility of consumable

products is in unlimited consumers. Naturally marketing of consumable product is masses

oriented where as our marketing strategy is client oriented. We dont have multilevel

marketing and we dont entertain multi level outlets. Where as manufacturer of consumable

product have to maintain the chain of distribution like wholesellers, stockist, retailers etc.

While marketing in our case, advertisement could not be useful tool for marketing purpose. In

our line one could withstand only on quality of product.

Generally manufacturer in our line enlisted themselves with reputed industries as vendor.

While applying of vendorship one should have to give detail information about hisorganisation. This information contains technical, financial and legal registrations aspects of

the organisations. After verifying the information provided to principle, the industry allotted

the vendorship. Being a vendor the every enquiry of your dine could be sent to vendors by the

principle company.

Beside this, requirementor enquires published in newspapers and tenders are to be invited by

various industries for their required products. In response to such enquires tenders are to be

submitted to the companies with technical bid and commercial bid.

We got special experience. Once we entertained any industry by supplying their requirementand if they satisfy with the quality of product, the officials of the industry recommended our


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name to their sister concerns or allied units of their industry. It was also experienced that any

officer who is aware about our quality, after leaving the company where he worked and

joined any other industry, he suggest our name at time of the procurement of the require

product, which would be of our dine. In short the quality of our product is unbeatable you can

get better chance to get an valuable orders and your client base could be vide.

We also participate in various exhibitions of FRP products. Where all types of people come

along and observe your products. We got good platform to display our various products. We

also notice that our other rivals having their capacity, skills etc. In such exhibitions. We come

to know the various market needs. So that way such type of exhibitions make you aware

about variety of product range as well as new techniques and different types of raw material

available.

We also tie up with the manufacturer of FRP products for certain deals. According to

capacity to carry the manufacturing products of different category. We share the orders.

Supposed if certain project may required storage tanks, different pipes and fitting, gratings,

cable trays. Total volume could be beyond the capacity of single manufacturer. In such case

we tie up other manufacturer and share the quantity with him as to production skill of

particular category. If our skill and production quality superior in manufacturing of tanks and

other one is having better craftsmanship in manufacturing of pipes and fittings than volume

of tank was undertake by us and quantum of pipings and fittings were let up to him. Ofcourse

such type of tie ups for certain jobs and on temporary basis.

We also have contacts with various consultant who managing agencies while project

errection for the industry who launch new projects and expansion of their existing projects.Such consultant recommend our name for particular product to interested company or

industry. Such industry or company to visit our factory to observe our ability to produce or to

manufacturing capacity

Sonal Engineering Plastic Fabricator undertake annual maintainance contract. So regular

clients asked the services of maintainance and repairings for their plant.

As to our experience we found Domestic market is fair enough to fetch good profit margin.

This is due to freight outward. Normally foreign clients asked the rates to their nearest port.

So freight up to their port curtails our profit margin. And our experience is that from ourfactory to Nhava Sheva port we have to pay handsome amount for local freight. So

considering the amount of freight grabs our profit margin.


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SWOT ANALYSIS

Strength:

1.It is having 40% more strength as compare to conventional material.

2.It is also having very light weight.

3.Since this is light weight it is easy to install and erect.


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4. This is NON-CORROSIVE, hence it is maintaince free.

Weakness:

1)Lack of skilled labours


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SEPF is manufacturing FRP industrial products as per the requirement of the customer. That

is why there are tailormade products.The design could be vary as per requirement and need of

the customer. Hence the prices could be vary as per requirement of the customer.

Normally, client invites the tenders from various manufacturers. That is why the client is

having very commanding role about the prices because he would have more choices. The

client of SEPF are industrial houses and hence he could have good technical knowledge.

Since clients knows technicalities, there are very short chances to dectate price terms by

manufacturer.

As and when the design is critical, there could be chance to manufacturer to dectate price

terms.

Overall prices are decided by market conditions and involvement of other players who

completing the tenders.

But it is also true the client who are industrial houses are aware about capacity and integridity

of FRP manufacturer. So they preferred product quality, accuracy and durability of FRP

product.

Some products such as piping and fittings could have better margin, since such pipings are

specially designed for their specific purpose. So some products which got specific role in the

manufacturing process are designed specially, such products could get high prices.

SEPF launched GRP pultruted products which are having some important features as follows,

Light weight and heavy strength.

Eye catching and bright colours.

Non corrosive and hence long lastings.

Easy to install and errect.

No maintainance cost.

Since these GRP products are machine made, the cost effective measures could be applied

and manufacturing cost could be controlled.

SEPF could be hunt the large market. At present there are very less players in the market.

Documents

Project Rohit