DEVELOPING PRICING STRATEGIES AND PROGRAMS

Presentation by Srujan Dasari

HOW

DO CONSUMERS PROCESS

AND EVALUATE

PRICES ?

Purchase decisions are based on how

consumer PERCEIVES PRICES

Traditionally, Consumers were considered “PRICE-TAKERS” -

accepted prices at the “FACE VALUE”

BUT

REFERENCE PRICES:Compare OBSERVED PRICE to INTERNAL REFERENCE PRICE or EXTERNAL FRAME

Clever Marketers try to FRAME THE PRICE

to SIGNAL BEST VALUE POSSIBLE (ex: EMIs)

Sellers Often attempt to manipulate them.

Fair Price Typical Price Last Price Paid

Upper Bound Price

Lower Bound Price

Historical Competitor

Prices

Expected Future Price

Usual Discounted

Price

PRICE QUALITY INFERENCES

Many Consumers use price as an INDICATOR of QUALITY

Some Brands adopt Exclusivity and Uniqueness to justify Premium Pricing

PRICE ENDINGS 999/- only

Customers see an Item priced $299 to be $200 rather than $300

“9”-ending also suggests Discounts/-

Prices ending with 0 and 5 are thought be be easier to process

DISCLAIMER

Created by Srujan Dasari, IIT Kharagpur,

during an internship by

Prof. Sameer Mathur, IIM Lucknow.

www.IIMInternship.com