Agri-input ( Group 1 )

1. PRICING
STRATEGY

2. To understand the key elements needed to run the
business.
Pricing method will help us to set the product price.
The way we set the price change over the course of
time.

3. Methods to price our product
• Cost based pricing
• Competition based pricing
• Customer based pricing

4. Cost Based Pricing Method:-
• Include a profit percentage with product cost.
• Add a percentage to an unknown product cost.
• Blend of total profit and product cost.

5. Include a percentage with product cost
• It is also called as Mark up pricing.
• This is normally followed by companies with many products.
• The profit level you want is normally expressed in percentage.
• This percentage is added to the per unit cost to the product price.

6. Add a percentage to an unknown product cost
• It is also called as cost-plus pricing.
• This is quite similar to the mark up pricing.
• This is normally followed when the cost of production is not known.
• Both the worker and the co-worker settle on a profit figure by
accepting that the cost of production is unknown.

7. Price is a blend of total profit and product cost
• It is also known as planned profit pricing.
• Break even analysis is used to calculate planned profit pricing.
• It is normally followed by manufacturing business and he will be
having the ability to increase or lower production depending upon the
demand or profit available.

8. Disadvantages of Cost Based pricing
• This method does not take into account the future demand for a product which
should be the base before deciding the price of a product.
• It also does not taken into account the competitor actions and its effects on pricing
of the product, because in today competitive world if one solely depends on cost
plus pricing it can lead to failure of company’s product in the market.
• It can result in company overestimating the price of a product because this method
ignores opportunity cost also while calculating cost and there is element of
personal bias while deciding the profit margin which is to be added for a product

9. Competition-Based pricing
Pricing that is determined by considering what
competitors charge for the same good. Once
you find out what your competition is charging,
you must determine whether to charge the
same, slightly more, or slightly less.

10. Customer
Product
Price
Cost
Value
Competition-Based Pricing

11. Pricing Strategy
• Price your product the same as the competition
• Set your price to increase customer base
• Seek larger market share through price

12. Price your product the same as the
competition
• This market pricing method aims to make your product comparable to
competitors
• This type of pricing works well if you make standard products
• If you make unique products, you need to decide how specialized
your product is
• Products can be plotted on a scale according to how unique they are.
Homogeneous products are on one end of the scale. Highly
differentiated products are on the other end

13. Set your price to increase customer base
• This method is also known as market penetration pricing
• This type of pricing intends to improve market share or penetrate the
market
• To motivate customers to notice your product and to make a
purchase decision you likely will need to lower the price
• In highly competitive markets this strategy will sell product quickly,
creating economies of scale and market penetration

14. Seek larger market share through price
• This type of pricing is often called market share pricing
• Companies who seek market share describe the amount of market
they supply as a percentage.
• Market share is calculated by dividing the amount each company in
an industry sells of the total market number.

15. Disadvantages
• You may ignore your own production costs if you focus too closely on
the prices set by competitors
• More time is needed to conduct and update market research
• Competitors can easily mimic whatever price you select

16. Customers change their buying habits according to product
price. As a seller the customer’s view about the product should
be known. There is also a need to find out customer attitudes
towards various prices or a price change.
At what price do the customers think that the product
offers good value?

17. What are
target
customers
prepared to pay
for your
product?
Do your
customers care
more about
prestige than
product price?
Will customers
think they are
getting their
money’s worth
from your
product?
Does your
customer
assume price
indicates
product
quality?
THINK ABOUT THE CUSTOMERS
AND ANSWER THESE QUESTIONS

18. CUSTOMER BASED
PRICING
•Penetration pricing
•Price skimming
•Loss leaders
•Predatory pricing
•Psychological pricing

19. 1.
PENETRATION
PRICING
• 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.
• Penetration pricing is most commonly
associated with a marketing objective of
increasing market share or sales volume.

20. Uses Penetration
pricing strategy in
Organic foods

21. Increased
market share &
sales volume
Supports launch
of a new product
No customer
loyalty
Threat from
competitors

22. 2. PRICE
SKIMMING
• Skimming involves setting a high
price before other competitors
come into the market
• Skimming price is mostly used
for technological products

23.  Target – Early
adopters
 Initially highpricing,
theneventually
launching another
model with higher
pricing

24. Create effective
segmentation
Good return on
the initial
investment
Competitors
soon may launch
rival products
Distribution
challenges

25. 3. LOSS
LEADERS
• A loss leader is a product priced below cost-price
in order to attract consumers into a shop or online
store
• The purpose of making a product a loss leader is
to encourage customers to make further purchases
of profitable goods while they are in the shop
• This pricing strategy is employed by retailers
selling a wide range of products

26.  Big Bazaar widely
advertises best deals
(often loss leaders) to
pull huge crowds to its
stores
 Big bazaar’s sales have
been newsmakers, with
people queuing up
hours in advance to lap
up the deals

27. Crowd
pullers
Loyalty is
more
Cherry
picking
Short term
pricing tactic

28. 4. PREDATORY
PRICING
• Prices are deliberately set very low by a dominant
competitor in the market in order to restrict or
prevent competition
• It is a strategy that entails a temporary price below
the cost of production in order to injure
competition and thereby reap higher profits in the
long run
• The preliminary objective of predatory pricing is
to capture and dictate the terms of market

30. 5.
PSYCHOLOGICAL
PRICING
• Psychological pricing is
a pricing/marketing strategy based on
the theory that certain prices have a
bigger psychological impact on
consumers than others
• The aim of psychological pricing is to
make the customer believe the product
is cheaper than it really is

31. Charm Pricing: Reduce the left digits by one

32. Prestige Pricing Strategy: Rounded figures & Premium
pricing

33. ‘BOGOF’: Buy one, get one free

34. Comparative pricing: Placing expensive next to
standard

35. Visually highlight the different prices

36. DISADVANTAGES OF CUSTOMER BASED PRICING

37. TIPS FOR SUCCESSFUL PRICING
Be
creative
Listen to
your
customer
Do your
homework
Boost
your
records
Cover the
basics
Be
flexible