Cp Marketing Management - II
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Transcript of Cp Marketing Management - II
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SUBMITED BY
RAVI PATEL (B) (IB 1109249)
Prashant
Rashmi
Jyoti
Yash
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CATERPILLER CASE STUDY
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PRODUCT BULLDOZER
COST TO MAKE & MARKET = $30000
PERCEIVED VALUE IN 5 YR LIFE = $ 100000
ADDED VALUE = $70000
PRICE HASE TO BE FIXED IN SUCH A WAY THAT $ 70000 WILL BESHARED BETWEEN BOTH CP AND BUYER
BASIC INFORMATION
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(1) SHARED ADDED VALUE 50% - 50%
SO PRICE WILL BE $65K
CUSTOMER POINT OF VIEW = PERCEIVED VALUE SHARE IN ADDED
VALUE
=$100K $35k
= $65K
CATER PILLER POINT OF VIEW = COST + SHARE IN ADDED VALUE
=$30k + $35k
= $65
OPTIONS FOR PRICING
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(2) IF CP BELIEVES THEIR CONTRIBUTION IS HIGH AND TAKE $50000K AND GIVE $20000 TO BUYER
CUSTOMER POINT OF VIEW = PERCEIVED VALUE SHARE IN ADDEDVALUE
=$100K $ 20k
= $80K
CATER PILLER POINT OF VIEW = COST + SHARE IN ADDED VALUE
=$30k +$50K
= $80K
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(3) CATERPILLER FEELS THAT BUYR CONTRIBUTION IS HIGHER AND GIVE$5O TO BUYER AND TAKE $20K
CUSTOMER POINT OF VIEW = PERCEIVED VALUE SHARE IN ADDEDVALUE
=$100K $50k
= $50K
CATER PILLER POINT OF VIEW = COST + SHARE IN ADDED VALUE=$30k + $20k
= $50k
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As in alternative 1 marketing research indicateddifferential advantage is not high, and competitorkomastu can easily copy with same quality at $20000 costto make and market within one week.
In this case I would like to suggest Penetrationpricing Strategy
By using this strategy, we launch the product in low price.An example for this pricing strategy is explained below.
Price =$30k+$15k=$45,
and we can offer at different scheme like we can offer 5%cash discount or 1 year credit period or instalmentfacilities etc.., by this way we can attract consumer to buyour product.
PRICING STRATEGYALTERNATIVE 1
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And we reduce the profitability of market at initial stage socompetitor Komatsu will not be attracted towards market. Itprevents entry of competitor at initial stage. During 1 yearperiod I will try to build brand loyalty by different ways like Iwill provide After sales Services
-- high Quality Product
-- CRM etcAfter building Brand Awareness we can increase our price andwe can earn better profit.
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In this alternative we can also use
Captive Product Pricing
In this case we offer bulldozer at low price say at $ 33K
with service contract with customer. Suppose service costis $ 3k and we made contract with customer to provideservices after 6 month or year at $ 10k. Then we can alsoearn overall $3k + $7k = $10k profit per unit.
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As in alternative 2 marketing research indicated that innovation ofBulldozer is so high that competitor komastu will take long time tocopy about 3 years.
So in this case we have substantial Competitive advantage I wouldlike to use
Premium Pricing or Price Skimming Strategy and launch productat more than $80k and earn profit of $50k. ($80k-$30k). As the highprice and profit attract new competitor and chances of entry ofcompetitor I will decrease the price up to $70k , $60 in 2nd and 3rd yearrespectively. And after 3 year I will decrease price up to $ 40k. If wedecrease price directly from $80k to $ 40k in 4th year customer may feel
cheated.
And with huge profit we will able to launch new high technologicalproduct
Alternative - 2
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And with huge profit we will also able to launch new high
technical product.
In this case we can earn profit during 3 years as under
1000 units * $50k = $50,000,000
1000 units * $40k = $ 40,00,000
1000 units * $30k = $ 30,00.000
_____________$ 120,000,000
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Thank You