The document discusses pricing strategies for Masoom, a non-profit school for children with special needs. Masoom previously used a cost-based pricing strategy, setting their prices for handloom products based on production costs plus a profit margin. However, the market is now more competitive, with customers having more choices. A case study showed that when Masoom shifted to a market-oriented pricing strategy, setting prices based on what customers are willing to pay rather than just costs, they were able to raise prices 10% while keeping sales volumes the same, increasing profits by 20%. The document argues that in today's market, understanding customer demand and perceptions of value is crucial for determining optimal pricing.
2. “The impact of change in pricing strategies from cost based to market oriented pricing strategy on the profits of Masoom(Non governmental organization)”
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5. “Today you have to run faster to stay in pace” (Philip Kotler)
6. Focus area Price: how much customers pay for a product Product: the features and appearance of goods and services Marketing mix Place: the point where products are made available to customers Promotion: how customers are informed about products
10. Different views…………………………….. Kotler (1976) and Assael (1985) identified three major strategies to be:1.Cost-oriented - methods based on cost plus mark-up, break-even, and target rate of return.2.Competition-oriented - entailing following the prices of competitors.3.Demand-oriented - pricing based mainly on the going price or customers perceived value. But, Gabor (1977) on the other hand classified pricing policies into two basic approaches - cost-based pricing and market-oriented pricing.
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12. The firm calculates the cost of producing the product and adds on a percentage (profit) to that price to give the selling price.Cost of production + profit percentage = Selling price
13. But, this all has changed! Today – plenty of products available in the market!!! Customers have a choice……………… Now its, the customer who decides the price that he is willing to pay $$$$
14. Question arises?????????????? Should Masoom continue to sell at Rs 15 – or should they do a consumer analysis and develop a pricing strategy based on the customer analysis in order to generate more profits?
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16. It is the pricing of products based on the market into which they are going to be sold.Today many companies are adopting this strategy. For example: BRITANNIA BISCUITS (Rs 5) (Rs 50)
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18. Assumed that their brand name would sell ,and did not do an intensive customer analysis.
19. DID NOT DO WELL………………IN THE MARKET!“Today they have re priced their collections and targeted the pricing at what the market is willing to pay”.
20. BUT, smaller companies without marketing professionals etc. are facing a problem as they still follow cost based pricing strategy. Case study: Increase in profits of Masoom due to shift from cost based pricing to market oriented pricing strategy.
