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Break Even Analysis & Market decisionPricing
Presented By:
VIVEK PANDEY (MO91083)
MUKESH PANDEY (MO91081) PRAJWAL PATHAK(MO91084)
Dhara
A Project on
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Factors Affecting PriceDecisions
Internal Factors
Marketing ObjectivesMarketing Mix StrategyCostsOrganizational
considerations
External Factors
Nature of the marketand demand
CompetitionOther environmentalfactors (economy,
resellers, government)
PricingDecisions
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Marketing
Objectives
SurvivalLow Prices to Cover Variable Costs andSome Fixed Costs to Stay in Business.
Current Profit Maximization Choose the Price that Produces the
Maximum Current Profit, Etc.
Market Share Leadership
Low as Possible Prices to Becomethe Market Share Leader.
Product Quality LeadershipHigh Prices to Cover Higher
Performance Quality and R & D.
Internal Factors Affecting PricingDecisions: Marketing Objectives
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Price
Product Design
Distribution
Promotion
NonpricePositions
Internal Factors Affecting PricingDecisions: Marketing Mix
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Market andDemand
Competitors’ Costs,Prices, and Offers
Other External FactorsEconomic ConditionsReseller Needs
Government ActionsSocial Concerns
External Factors AffectingPricing Decisions
Competitor Costs
This ad by LCI International accuses its competitors of using
unfair practices in pricing, hiding fees incurred by rounding up.
Hidden fees, defined as
“cramming” by the
FCC, are the number
one source of billing
complaints among
long-distance
customers.
Why is LCI focusing on
this practice?
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Pure CompetitionMany Buyers and Sellers
Who Have LittleEffect on the Price
MonopolisticCompetition
Many Buyers and SellersWho Trade Over a
Range of Prices
Pricing in Different Types of Markets
Market and Demand FactorsAffecting Pricing Decisions
OligopolisticCompetition
Few Sellers Who AreSensitive to Each Other’s
Pricing/ MarketingStrategies
Pure MonopolySingle Seller
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Major Considerations in SettingPrice
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Cost-Based Pricing
Certainty AboutCosts
Pricing isSimplified
Price CompetitionIs Minimized
U n e x p e c t e d S i t u a t i o n a l F a c t o r s
Attitudes
of Others
Ethical
IgnoresCurrent
Demand & Competition
Cost-PlusPricing is an Approach That
Adds aStandard
Markup to theCost of theProduct.
Simplest
PricingMethod
Much Fairer to
Buyers & Sellers
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Product
Cost
Price
Value
Customers
Customer
Value
Price
Cost
Product
Cost-Based Pricing Value-Based Pricing
Cost-Based Versus Value-BasedPricing
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Setting Prices
Sealed-BidCompany Sets Prices Based onWhat They Think Competitors
Will Charge.
Going-RateCompany Sets Prices Based on What
Competitors Are Charging.
?
?
Competition-Based Pricing
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New Product Pricing Strategies
Market Skimming
Setting a High Pricefor a New Product to“Skim” MaximumRevenues from theTarget Market.
Results in Fewer, ButMore Profitable Sales.
Use Under TheseConditions:
Product’s Quality andImage Must Support ItsHigher Price.Costs Can’t be so Highthat They Cancel theAdvantage of ChargingMore.Competitors Shouldn’t beAble to Enter MarketEasily and Undercut theHigh Price.
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New Product Pricing Strategies
Market Penetration
Setting a Low Price for aNew Product in Order to“Penetrate” the MarketQuickly and Deeply.
Attract a Large Numberof Buyers and Win aLarger Market Share.
Use Under TheseConditions:
Market Must be HighlyPrice-Sensitive so a LowPrice Produces MoreMarket Growth.Production/ DistributionCosts Must Fall as SalesVolume Increases.Must Keep OutCompetition & MaintainIts Low Price Position orBenefits May Only be
Temporary.
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Product Mix-PricingStrategies:Product Line Pricing
Involves setting pricesteps between various
products in a productline based on:Cost differencesbetween products,
Customer evaluations ofdifferent features, and
competitors’ prices.
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Product Mix- Pricing Strategies
Optional-ProductPricing optional or
accessory productssold with the mainproduct. i.e camera bag.
Captive-ProductPricing products thatmust be used with themain product. i.e. film.
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Product Mix- Pricing
StrategiesBy-Product
Pricing low-valueby-products to getrid of them andmake the mainproduct’s pricemore competitive.
i.e. sawdust, ZooDoo
Product-BundlingCombining severalproducts andoffering thebundle at areduced price.
i.e. theater seasontickets.
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Discount and Allowance Pricing
Cash Discount Seasonal Discount
Quantity Discount Trade-In Allowance
Functional Discount Promotional Allowance
Adjusting Basic Price to Reward Customers
For Certain Responses
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Psychological Pricing
Considers the psychology ofprices and not simply theeconomics.
Customers use price lesswhen they can judge qualityof a product.
Price becomes an important
quality signal whencustomers can’t judgequality; price is used to saysomething about a product.
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Special-Event Pricing
Cash Rebates
Low-Interest Financing
Longer Warranties
Free Merchandise
Discounts
Loss Leaders Temporarily PricingProducts Below List
Price to IncreaseShort-Term Sales
Through:
Promotional Pricing
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Special-Event Pricing
Cash Rebates
Low-Interest Financing
Longer Warranties
Free Merchandise
Discounts
Loss Leaders Temporarily PricingProducts Below List
Price to IncreaseShort-Term Sales
Through:
Promotional Pricing
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