RECAP of 16/11/2011

On 16/11/2011 we discussed about the First & Former step while Setting Price. i.e.:- Selecting The Pricing Objective.

Selecting the Pricing Objective:-
1. Survival
2. Maximum Current Profit
3. Maximum Market Share
4. Maximum Marketing Skimming

1. Survival:-
Companies pursue survival as their major Objective if they are plagued with over capacity, intense competition, or changing consumer Wants. Survival is a Short Run Objective.Today we discussed example of Nirma. How it started and compete with other Big players like Tide, Surf Excel, Ariel etc. & Survive in the market.

2. Maximum Current Profit :-
Many a times companies try to set a price that will maximize current profits. Company estimate demand and costs associated with alternative prices and choose the price that produces maximum profit. we discussed the example of Ra-One. which crossed revenue of Rs. 170 cr.

3. Maximum Market Share :-
Companies may also like to increase their market share with a view that higher sales volume will lead to lower unit cost and may higher long run profit.

4. Maximum Market Skimming :-
Price skimming is a pricing strategy in which a marketer sets a relatively high price for a product or service at first, then lowers the price over time. It is a temporal version of price discrimination/yield management. It allows the firm to recover its sunk costs quickly before competition steps in and lowers the market price. E.g.:-Price skimming has been used for certain high-end electronics. For instance, the sony PS-3 was initially sold at Rs. 27000, but the price has gradually reduced to Rs.14000.

We also Discussed following pricing method
1. Product Line Pricing
2. Discriminatory Pricing
3. Captive Product pricing
4.Optional Product Pricing
5. Going Rate Pricing
6. By Product Pricing

Participant,
Sunil Mehta