This document discusses pricing as part of the marketing mix. It begins with definitions of marketing management and pricing. Pricing objectives aim to achieve organizational goals like profits or market share. Price is determined based on customer benefits and perceptions of value. Companies consider cost-based, need-based, and market-based approaches to set prices. The conclusion emphasizes that price should relate to customer perceived value of product benefits.

1. PRICE AS A PART OF
MARKETINGMIX
By
BY
SMART LEARNING WAY

2. INTRODUCTION
• Marketing is the delivery of customer satisfaction
at a profit. The twofold goal of marketing is to
attract new customer by promising superior
value and to keep current customers by
delivering satisfaction. Sound marketing is
critical to success of any organization-large or
small, for-profit or non profit, domestic or global.
Large for profit firms such as McDonald's, Sony
FedEx, wall-mart and marriott use marketing; but
so do nonprofit organization such as colleges,
hospitals, museums, symphonies, and even
churches.

3. FLOW OF PRESENTATION
1. Introduction
2. Definition of marketing management
3. Definition of pricing
4. Pricing objectives
5. Benefits and price
6. Bases of pricing
7. Conclusion
8. Review of presentation
9. Bibliography

4. • Even in eastern Europe and other parts of the
world in which marketing has long had a bad
name, dramatic political and social changes
have created new opportunities for marketing
Business and government leaders in most of
these nation are eager to learn everything they
can about modern marketing practices. We
begin by defining marketing and its core
concept, describing the major philosophies of
marketing thinking and discussing some of
major new challenges that marketers now face.

5. Definition of marketing
management
• ‘’Marketing, more than any other business
function, deals with customers. Creating
customers value and satisfaction are the heart of
modern marketing thinking and practice’’.
• ‘’Marketing is the delivery of customer
satisfaction at a profit. The twofold goal of
marketing is to attract new customer by
promising superior value and to keep current
customers by delivering satisfaction’’.

6. Definition of marketing
management
• ‘’Marketing as a social and managerial process
by which individuals and groups obtain what
they need and want through creating and
exchanging products and value with others’’.
• ‘’Marketing is the process of planning and
executing the conception pricing, promotion and
distribution and ideas goods services to create
exchange that satisfy individual and
organizational goals’’.

7. Definition of pricing
1.For many product, the buyer is interested
not only in the physical entity called the
product but also in a host peripheral
elements. The buyer is interested in the
‘price’ of the whole ‘package’ consisting of
the physical product accessories, after-sales
service, replacement parts, trade-in
privileges, and technical guidance.

8. 2. Prices sometimes vary by the type of
customers. Wholesalers pay a lower price
than retailers who in turn pay somewhat
less than ultimate consumers. Bulk buyers
often get discounts. A buyer is interested
in knowing which price he would end up
paying: list price, retail price, wholesale
price ex- factory price, etc..

9. 3.Price can vary depending on whether it is
delivered price or price at the originating
point.
4.The buyer would view a price quite
differently on when it is to be paid. The
amount of credit, the repayment schedule,
and the interest rates influence the buyer’s
perception of price.

10. Pricing objectives
• These should be derived form an
organization’s overall objectives. These
are essentially some tasks to be achieved.
Quite often a product has a multiple
number of pricing objectives, with some
implicit understanding of priorities.
Generally they provide guidelines to the
operating manager. The probable pricing
objectives are to:

11. 1.Earn a certain return on investment in the
subsequent period;
2.Achieve a certain amount of market share
in the foreseeable;
3.Attain a certain amount of growth in sales;
4.Stabilize the market ,i.e. to restore order in
a fluctuating market;

12. 5. Undermine the efforts of new entrants to
gain footholds;
6. Prevent competitors from entering into
one ‘s territories;
7.Make competitors accept one as the price
leader;
8. Avoid government investigation and
control;

13. 9. Maintain the loyalty of middlemen and get their
sales support;
10. Augment the sale of weak items in the product
line;
11. Enhance the image of one’s product and firm;
12.Recover the investment made within a set
period of time; and
13. To set the price at a level that will maintain the
employment level.

14. Benefits and price
Throughout this book we have
suggested that in any purchase decision the
customer is seeking to acquire benefits. A
product must bring with it the promise of
performing certain tasks of solving identified
problems or even of providing specific
gratifications. Thus the product is not bought for
the particular components or materials that go
into its manufacture per se, but rather it is
bought for what, as an entity, it can do.

15. The implication of the benefits
concept form a pricing point of view is that the
company must first identify the benefits the
customer perceives the product to offer and then
attempt to ascertain the value that the customer
places upon them. The key issue here is that it
is the customer perception that is important. It
may be for example that two competing
companies offer product that are technically
identical to all intents and purposes and yet one
company can command a premium price. Why
should this be?

16. It may be that additional benefits
offered by one company in the way of technical
advice or after sales service are perceived to be
superior to those offered by another. Or it may
just be that the image of that company is seen
as superior. Whatever the reason there are
many cases of this type of differential advantage
that cannot be explained simply in technical or
quality terms.

17. strong brands have always
been able to command a price premium
designer labels on fashion garments or
obvious examples of the impact of brand
image. Even in industrial markets the
power of the brand can be significant.

18. Another way to look at this price
advantage is to think of the maximum price at
which the product could be sold as being the
sum of two elements. First there is the
commodity price element which is the base price
for the generic product this can be determined
by supply and demand in the market place. On
top of this should be added the premium price
differential which reflects the totality of the
customer perceives will be acquired through
purchase of that product.

19. The existence of this
premium price differential can only be
explained in terms of perceived benefits.
The task of the pricing decision maker
therefore, becomes one of identifying
these benefits and placing a customer
value upon them.

20. price obtained
Premium price
differential
commodity price
supply/demand
determined
factor costs

21. it is in reality a ‘bundle’ of
benefits and so the first step in this
suggested approach to pricing is to
‘unbundle’ the product and identity the
individual benefits components that
together constitute the totality. the
challenge to the pricing decision –maker is
to shift the emphasis away from price
towards a wider concept of the total cost
of ownership.

22. This idea is based upon the
fact that with many product, the customer
will incur many costs other than the initial
price over the lifetime of the product. Thus
in buying a motor car there are significant
costs other than the initial price over the
lifetime of the product. Thus in buying a
motor car there are significant cost
beyond the ‘sticker price’ such as running
cost, insurance, service and depreciation.

23. The Korean car
manufacturer Daewoo has achieved
considerable success in its European
marketing campaign by highlighting the
true cost of ownership of its model as
compared to competitors models, for
example.

24. Bases of pricing
• Need based pricing
• Cost based pricing
• Market- based pricing

25. Need based pricing
1. Ability to pay
2. Comparative reasonable price
3. Pricing by norm
4. Poorest can afford

26. 1. Ability to pay:
the price may be determined
according to the ability of the consumer to
pay. This method of pricing is used in the
pricing of state health service, some of
the schooling service, housing provided by
government or public sector companies,
etc..

27. 2. Comparative reasonable price:
In some cases, price Is
determined by using a comparative and
reasonable ‘open market’ price as reference.
3. Pricing by norm:
A norm may be developed. For
example food in an institutional cafeteria may be
priced on the basis of a paisa per calorie norm.

28. 4. Poorest can afford:
sometimes pricing of an
essential commodity or service is done on
the basis that the poorest section of the
society should be able to afford the
product. Rationed sugar or grain and
controlled cloth are priced based on such
consideration.

29. Cost based pricing
Cost- based pricing can be done on
the basis of full costs or variable cost. Full –cost
pricing is simple if costs are known with
accuracy and certainty. However, this type of
pricing should be used with caution because the
demand may not be equal to targeted output.
Variable-cost pricing is used in special cases
where it is desirable to stimulate demand and
generate some contribution towards fixed
overheads which are irreducible in the short run.

30. For example, readymade
garments which go out of fashion are often
sold at cut prices so as to recover the
direct variable costs and may contribute a
little to the overheads.

31. Market based pricing
Any pricing policy which
takes demand factors into consideration
and seeks to maximize revenues or profits
is called market based pricing is fraught
with uncertainties of demand estimation
and market response, the problem is often
divided into small, structured manageable
steps, each of which the executive can
hope to tackle with judgment. The
following steps may be used:

32. 1. Selection of target markets for the
product under consideration.
2. Choosing a product image consistent
with the product quality and target
consumers.
3. Composing a marketing mix to achieve
desired image and position.
4. Selecting a broad pricing strategy
consistent with above steps.

33. 5. Arriving at a specific price which
judgmentally appears to be the profit-maximizing
price.

34. Conclusion
the pricing decision is one of the most
important issues to be faced by the marketing Manager.
Almost every market is influenced to some extent or
another by the relative price of the products that
compete in that market
when customer buy products they are
making choices based upon their perception of the
relative value of competing offers. The maximum price at
which a product or service can be sold can be no
greater than its perceived value.

35. • In this chapter we have proposed that
price should be related to the value of
benefits that our product or service
delivers. Techniques such as trade off
analysis can be utilized to assist in
reaching pricing decisions, particularly in
the valuation of benefits.

36. Review of the presentation
1. Introduction
2. Definition of marketing management
3. Definition of pricing
4. Objectives of pricing
5. Benefits and pricing
6. Bases of pricing
7. Conclusion

37. Bibliography
1. Principle of marketing
Philip kotler
Gary Armstrong
prentice hall of India private limited, New Delhi
2. Marketing management
crenifield school of management
3. Marketing management cases and concepts
nikhilesh Dholakia
rakesh Khurana
Labdhi Bhandari
Abhinandan K JAin
Macmillan India limited

38. 4. Product management in India
Ramanuj Majumdar
prentice hall of India private limited, New Delhi
5. Principles of marketing
Philip kotler
Gary Armstrong
prentice hall of India private limited, New Delhi