PRICING STRATEGIES

Price point of INR 5 has become a magic word for marketers after the Coca Cola campaign. p g Lower and middle class consumers now want to buy packs of anything snacks, biscuits, chocolates, detergent bars, mobile calling cards, shaving blades as long as they are available for five rupees. Telecom players now offer INR 5 recharge plans.

TARGET PRICING
Rural consumers conscious of value for money y Tata Nano Gillette Guard
o Blade and a plastic handle costing Rs. 15/o Each replaceable blade costing Rs.5/-

SETTING THE PRICE FOR RURAL PRODUCTS AND SERVICES

Cost Price to at least cover the total costs (fixed ( and variable costs). For rural areas there should be sufficient funds for packaging, promotion and distribution. Promotional Costs
o T Television l i i penetration t ti i is still till l low o Rural people want, touch and feel. o Collective platforms like haats haats, melas and mandis can

be used where in people turn in large numbers.

Distribution Costs
o HUL made investments in channels like Project

Shakti .
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PRICING OBJECTIVES OF THE COMPANY

As there is a trade off between the quality on offer and the price price, price is an important variable in positioning. Profit maximisation in the long run
o Tata Swach was launched in 1980 for less than INR

1000. o No electricity required. o Target customers are the 85% Indians who do not filt water. t filter

Minimum Return on Sales Turnover

o Difficult to make instant profits in the rural market market.

Therefore pricing objectives need to cover production and dealer margins. g distribution, p
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KEEPING UP WITH THE COMPETITION

Deeper penetration of the market Britannia l launched h d ti tiger bi biscuits it at t INR 1 1, INR 2 and d INR 4 price points. Keeping up with the competition
o In rural areas stiff competition to national players from

regional and local players like Ghari Detergent, Wagh Bakri Tea, Anchor toothpaste, Priyagold biscuits, Emami cosmetics, Parakh foods Maxo mosquito repellent. o Low production and distribution cost for the local players. players

PRICE SENSITIVITY OF CUSTOMERS

Self managed g instalment scheme Chic Shampoo Ghari Detergent Fena washing soaps

CHANNEL COSTS
Distribution costs are important as there are 6,00,000 villages to be reached. Retailers in the village has to extend credit

COMPETITION
Company with the maximum market share often creates a pricing standard Multiple national and international competitors define the competition

ENVIRONMENT
Government policies, change in the economy, and new technology are the main factors affecting the i price.
o Poor monsoon and crop failure decreases purchasing

power of farmers farmers. o Technology Godrej Chotukool, Nokias simple handsets.

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PRICE SETTING STRATEGIES

Market Entry Strategies
o Skimming g Pricing g - P&G introduced Ariel and Tide

and high prices o Penetration Pricing Anchor white and Ajanta T th Toothpaste t

Product Mix Pricing Strategies

o Optional product pricing - LG, LG Samsung, Samsung Onida and

Videocon. o Captive product p pricing p p g

BSNL offered free telephone connections ITC e Choupal levied no charges for extending Internet facilities to rural consumers

o Product bundle pricing

Used by companies during festival and marriage seasons.
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Price adjustment strategies

o Discounts and allowances
Cash discounts - retailers to be given enough margins so that cash discounts can be given to the consumers Quantity y discounts Providing g more q quantity y for the same price good knight mosquito coil 1+1 scheme

o Freebies
Free gift to be compatible
Tooth brush with toothpaste Cup with tea

Regional R i l and dl local lb brands d h have advantage d t as th their i d delivery li system ensures that the gift reaches the customer. National players
Retailers replace the gift with an inferior one Customers are ignorant Local media is used to announce schemes The gift is inserted in the main pack Picture of gift printed on the pack of the core product
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Special p Event Pricing g

o Hero Honda Van campaign
Bookings against deposits of INR 500 and gave a watch free in return return.

o Economy Pricing
Frills are removed Maharaja sturdy Bonus Washing Machine priced at INR 2990 The machine has no drier LG TV at INR 8000 (No golden eye, only 100 channels) Escorts launched Rajdoot 223 at INR 33,3300. Cheaper than other bikes.

o Value Pricing
Godrej No. 1 soap containing rose, sandalwood and neem Ajanta vegetarian toothpaste at a low price

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RURAL SPECIFIC PRICING STRATEGIES

Low Price Points
o o o o

o o o o o

Help p market p penetration Low price packs maintain freshness Customer have more choice Bh t petroleum Bharat t l introduced i t d d5k kg mini i i gas cylinders li d priced at INR 100 to reduce initial deposits and refill costs targeted at fixed low income groups groups. Godrej Selling Expert hair colour and Nupur Henna at INR 5 and INR 10. Nestea @ 2 and 10 CavinKare sells Nile and Chik shampoo at 50 paise and INR 1 packs k Frito lay and Kurkure at 3 and 5 Good Day and Cream Treat biscuits in INR 5 packs packs.
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Low cost packaging Britannias Tiger Biscuits Refillable/Reusable packs

o Fertilisers in refillable packs

Highlight features not price

o Hero Honda highlighting mileage, lower maintenance

costs higher resale value costs,

Coinage Pricing
o Coca Cola, Pepsodent, p Ponds Dream flower, Ponds

Cold Cream, Rin, Taaza, Fair and Lovely, Clinic Plus, Lux

P d t Sharing Sh i S i Product Services

o HPCL Rasoi Ghar Model

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THANK YOU

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