2. A Presentation
On

3. Presented By
Asraful Islam Rayhan

4. Contents
 Price & Pricing?
 Objectives of Pricing
 Methods of Pricing
 Pricing Strategies
 Consideration in Price Setting
 Internal & External Factors in Price setting
 Mix Pricing Strategies
 New Product Pricing Strategies
 Pricing Adjustment
 Pricing Policies

5. Price?
Price is the amount of money charged for “something of a value ”.
Or
The amount of money charged for a product or service or the sum of values
that customers exchange for the benefits of having or using the product or
service.

6. 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.

7. What is Pricing?

8. Pricing Continued…

9. Pricing Objectives

11. Pricing Methods

13. MAJOR PRICING STRATEGIEs
Customer value based pricing – uses buyer’s perception of value,
not the seller’s cost, as the key to pricing.
1.Good Value Pricing – offering the right combination of quality and
good service at a fair price. It involves redesigning existing brands to offer more
quality for a given price or same quality for less.
2. Value Added Pricing – attaching valued added features and
service to differentiate a company’s offers and charging higher prices.

14. MAJOR PRICING STRATEGIEs
Cost Based Pricing – involves setting prices
based on cost for producing, distributing and selling
the product plus a fair rate of return of effort and risk.
1. Cost – Plus Pricing – the simplest pricing
method. It involves adding a standard mark up to the
cost of the product.
2. Break Even Pricing – a variation called
target return pricing.

15. Types of Cost
1. Fixed costs (overhead)
Costs that do not vary with production
or sales level.
2. Variable costs
Costs that vary directly with the
level of production.
Total costs
The sum of the fixed and
variable costs
for any given level of
production.

16. Cost-Plus Pricing Method
Now suppose the manufacturer wants to earn a 20
percent markup on sales. The manufacturer’s markup
price is given by the following

17. Break-Even
Analysis

18. MAJOR PRICING STRATEGIEs

19. Considerations in Setting Price

21. INTERNAL AND EXTERNAL CONSIDERATIONS
AFFECTING PRICE DECISIONS

23. Determining demand
 Each price will lead to a different level of demand and have a different
impact on a company’s marketing objectives.
 Demand and price are inversely related i.e. Higher the price, lower the
demand
 Company needs to consider :-
1.Price sensitivity
2.Price elasticity of demand

24. What influences Price Sensitivity?
 Shared cost ( part of cost is
borne by other party)
 Sunk investment (product
used is required as a
complement to earlier
purchase)
 Inventory effect (buyers can
not store the product)
 End benefit
 Substitute awareness by buyers
 Difficult comparison by buyers
 Total expenditure (purchase
cost is insignificant compared
to end product)
 Low cost: less sensitive, High
cost: more sensitive.

25. Price Elasticity
 This determines the changes in
demand with unit change in
price
 If there is little or no change in
demand, it is said to be price
inelastic.
 If there is significant change in
demand, then it is said to be
price elastic.

26. NEW PRODUCT PRICING STRATEGIES

27. Pricing in Different Type of Markets
 Pure Competition – Seller in these markets does not spend much
time on marketing strategy.
 Monopolistic Competition – A range of prices occurs because
sellers can differentiate their offers to buyers.
 Oligopolistic Competition – the market consists of a few sellers
who are highly sensitive to each other’s pricing and marketing strategies.
 Pure Monopoly – The seller may be a government monopoly, a
private regulated monopoly, or a private non – regulated monopoly.

29. 2441139…?? Time for Fun

30. PRICE ADJUSTMENT STRATEGIES

31. Form of Price Discount
 Cash Discount – price reductions to buyers who
pay their bills promptly.
 Quantity Discount – is a price reduction to
buyers who buy large volumes.
 Functional Discount – trade channel members
who perform certain functions such as selling, storing
and record keeping.
 Seasonal Discount – is a price reduction to
buyers who buy merchandise or services out of
season.

32. Pricing Situations
 New product pricing
 Life cycle pricing
 Positioning strategy
change
 Countering
 competitive threats

33. Analyzing The Pricing Situations

34. Suppose, Buyers’ Perceptions of Value Offerings of Brands A-E

36. Role of Price in Positioning Strategy

37. FOUR RESPONSES OF PRICE
CHANGE
 Reduce its price
 Raise the perceived value
 Improve quality and increase price
 Launch a low price fighter brand

38. PRICING POLICIES
A. Pricing within Channel Levels
1. Sellers are prohibited on price fixing.
2. Sellers are prohibited from using
predatory pricing.
B. Pricing Across Channel Levels
1. Unfair Price Discrimination.
2. Retail price maintenance
3. Deceptive Pricing