Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Notes
Dr Amit Rangnekar www.dramitrangnekar.com Pricing Strategies based on cost, competitor and customer Strategy Example Meaning Cost based Cost plus (markup) Break even Retail Pharma, FMCG Margins known, prices can be high Large volumes Competition based Going rate Sealed bids Competitive Cartelling Banks, petrol, Tenders Pepsi, Coke Cement, OPEC Customer based Auctions EDLP Loss leader Penetration Perceived Value Predatory Prestige Price Skimming Psychological Value Ebay Airlines, Discounters Factory outlets FMCG, Pharma Clubs, lifestyle brands Dominant brands Designer, Car, Watch Technology brands Bata, mobile, internet Buffet, superstores Bidding Every day low price, different prices, bargain based Discount to entice purchase, experience brand Low price launch, increase later, low differentiation What customer is willing to pay Sell at / below competitors cost Perception of premium, exclusivity New launch at premium prices, reduce later Below perceived barrier price, Rs 100< 99 perception Enticing pricing, deal Wide choice, no differentiation, competitionprice/service/ reach
Product mix pricing Bait & Hook (Captive) Bundling Razors, Printers Season tickets, Maggi noodles with ketchup Cheap main product, costly peripherals, consumables Bundle own/ others leading brand with new introduction or slow moving product
Dr Amit Rangnekar
www.dramitrangnekar.com
Page 1
Discriminatory pricing Customer segment Image Location Student discounts Licence plate numbers Theatres, Stadium Students are offered travel discounts- air, rail, bus Premium is charged for specific car numbers Different seats command different rates Higher quantity, prompt payment- discounts Hotel rates vary by season in tourist destinations Multiplexes rates vary by weekdays, weekends
Quantity and payment Bonus offer, discount Season Time Goa hotel prices vary Multiplex prices
Other Pricing strategies Geographic Promotional Financing Psychological Discounting Old for New Price point Usage pricing Medicines, books Discounts, BOGOF EMI, warranty, AMC Prices slashed 399 to 199, online Electronics, apparel Maruti, Cadbury, Nokia, Titan, Bata Broadband pricing Same medicines and books are priced different across geographies Introduction, revive, new line Absorb add-ons and facilitate easier payment options Buyer bargains, raise price and then offer discount Exchange offers Range, occasions Flat rate, time based or volume based
Dr Amit Rangnekar
www.dramitrangnekar.com
Page 2
Classifications of Products Consumer Goods Convenience goods Frequently purchased, minimum effort, easily available Staples- toothpaste, soap, biscuits, milk, sugar Impulse goods- chips, chocolates, ice creams Emergency goods- sweaters, raincoats, umbrellas Shopping goods Speciality Unsought Industrial Goods Durability, tangibility Durable Nondurable Services High lifespan, low frequency- Car, fridge, TV, furniture Limited period use- footwear, clothes, home furnishing Acts, performances, deeds Product Relationships Product Hierarchy Product mix -Lines -Width Needs extend from core to potential, through levels (hierarchies) All the products, lines, extensions, SKU Related products, same customer groups, same channels Samsung, LG, Sony Consumer Electronics Number of different product lines HP- PCs, Laptops, Printers Clothes, footwear, TV, laptops, refrigerators Jewellery, cars, tools, camera, adventure gear Fire extinguishers, Encyclopedia, Life insurance, Mediclaim B2B- materials, parts, capital items and services
Dr Amit Rangnekar
www.dramitrangnekar.com
Page 3
Product decisions
Dr Amit Rangnekar
www.dramitrangnekar.com
Page 5
The PLC helps outline the market trends and is used for product planning and control as well as for sales forecasting1,2. The main stages of the product life cycle are: Introduction The product category may be new or could exist as a niche or as a small segment, which with greater acceptance, may grow larger. In this phase the major task is to create awareness about the product category and to educate potential customers about its uses and benefits. Tablets (Tab), Maruti Ertiga, Blackberry 10, Windows 8, IPad Mini. Growth Products or services experience a phase of rapid unit sales growth. The challenge in this phase is to build your brand. With greater acceptance, coverage and availability, the sales growth is high. But the growth may also attract competition, which will grow the market further. Incumbents focus on brand building strategies and may launch extensions and variants to cater to different segments. Smartphones, Apple, Samsung, Audi, BMW, Ghari, Cadbury, Samsung Galaxy Note 2. Maturity In this phase, from a sellers market, there is a shift towards a buyers market, a bigger market. But growth rates are stagnant or slowing down. Margins may decline or price wars may ensue. Consolidation may occur as bigger and more ambitious players acquire small firms or small firms close operations. Competitors are present in all segments, and carve out new features to serve specific but profitable segments. Firms may revitalize their brands. Laptops, Nokia, Mecedes Benz, Wheel, Bournvita. Dr Amit Rangnekar www.dramitrangnekar.com Page 6
Objectives
Products Price Distribution Promotion
Increasing competition, technology & changing economic conditions make firms reformulate positioning and differentiation strategies during a PLC.
10.1.3.1 Marketing Strategies: Introduction Stage
Dr Amit Rangnekar
www.dramitrangnekar.com
Page 7
If the product is a pioneer or being introduced for the first time, its success can bring in huge profits and the advantages of being the first mover. But a pioneering introduction could be risky and costly due to high development costs, as acceptance by customers may take longer than expected. The pioneer would have to invest in creating brand awareness, but can gain instant recall, leadership, strong association with the category, wide availability and brand equity.
If the product is not a pioneer but a follower, it can succeed by introducing better products or technology than the innovator in terms of performance and benefits. The follower would have to incur less promotion and development costs.
Introduction of product extensions and variants, as well as new features for existing products may be added to target newer segments. Advertising may focus on converting new customers and retaining existing ones by highlighting their benefits over competitive brands. 10.1.3.3 Marketing Strategies: Maturity Stage In this stage product growth rates would decline, as increased competition would wean away customers. The major players would assert themselves by acquiring smaller firms and a consolidation in the industry may be evident, where few players would dominate, besides specialists and nichers. Maturity would result in industry overcapacity and price wars. Firms may focus on few profitable products and lucrative new segments to remain relevant, and increase use, users, and usage of existing customers.
10.1.3.4 Marketing Strategies: Decline Stage In the decline stage, sales are lower than earlier years as customers shift due to changes in tastes, advances in technology and availability of superior competitive alternatives. The lack of sales and erosion in profits may force firms to reduce promotion and milk or harvest. Firms could focus on retaining key customers through selective product promotion and limited investment.
Dr Amit Rangnekar
www.dramitrangnekar.com
Page 8
10.1.4.1 Style Style is a more personal but distinctive form of self-expression. A person may use cuff-links or smoke a pipe or wear a cap, or wear traditional clothes, all of which are personal choices or individual style. A person may don a peculiar style for years without caring for the latest fashion.
10.1.4.2 Fashion Fashion is the style that is popular or currently accepted in a market. But how long fashion would last is difficult to predict. Fashions pass through four stages5- Distinctiveness, emulation, mass-fashion and decline. Fashion may go out of fashion but returns after some time. Bell bottoms, pleated trousers, long hair keep coming and going in and out of fashion.
10.1.4.3 Fad Fads are fashions that are immediately accepted, become popular quickly, are followed with enthusiasm by few, but peak early and phase out very fast. Fads do not satisfy an underlying need due to which they do not last long and are short lived. The Ghajini hair-cut, Pool (similar to Billiards) as a sport in India and the 3 Idiots stool, were all fads that faded out after the initial enthusiasm.
Dr Amit Rangnekar
www.dramitrangnekar.com
Page 9