PRICING STRATEGY

LPD

March

2012

WHY PRICING IS A MAJOR ELEMENT OF THE MM Price is the exchange value of a product. It is the only marketing mix element that generates income. Pricing affects other elements of marketing mix. It is the only marketing mix at full control of marketer
LPD March 2012

FACTORS INFLUENCING PRICING 1. INTERNAL FACTORS 2. EXTERNAL FACTORS

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March

2012

INTERNAL FACTORS

COST

COMPANYS PRICING OBJECTIVES

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March

2012

COST FACTORS
MARKET DEVELOPMENT PACKAGING COST NUMBER OF SKUs PROMOTION COST COMMUNICATION CREDIT TRANSACTIONS DISTRIBUTION COST
LPD March 2012

PRICING OBJECTIVES
Profit maximization Keeping up with competition

Minimum returns on sales turnover

Increasing sales volume n market share

Deeper penetration of the market

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March

2012

EXTERNAL FACTORS

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March

2012

PRICING STRATEGIES
OPTIONAL PRODUCT PRICING Ex:Tractor +accessories AVOID SOPHISTICATED PACKAGING Ex: 3 roses tea packaging for rural market, Britannia Tiger biscuit

CAPTIVE PRODUCT PRICING Ex:camera+battery

REFILL PACKS/REUSABLE PACKS Ex: Horlicks, Fertilizer in LDP, Distemper cans

LOW PRICE POINTS Ex: ` 5 Maggie

PRODUCT SHARING SERVICES Ex: BSNL landline

LPD

March

2012

MARKET-ENTRY STRATEGIES
PENETRATION PRICING Ex: Henko detergent, Gillet Wilkinson sword blade
ECONOMY PRICING Ex: Lifebuoy, Hamam VALUE PRICING Ex: Hero Honda CD 100 COINAGE PRICING
Ex: ` 1 Sachets of shampoo, tea powder etc

PSYCHOLOGICAL PRICING Ex: footwear , ` 39.99 PRICE ADJUSTMENTS Ex: Discount for bulk purchase

DISCOUNTS& ALLOWANCES Ex: Coupons, Credit system

FREE GIFTS Ex: Gold coin in Lux, Buy 1 get 1 free, tattoo with bubble gums
March 2012

LPD

DISTRIBUTION STRATEGY
COVERAGE OF VILLAGES BASED ON POPULATION

USE OF COOPERATIVE SOCIETIES

USE OF PUBLIC DISTRIBUTION SYSTEM USE OF MULTI PURPOSE DC BY OIL COMPANIES HAATS/MELAS AGRICULTURE INPUT DEALERS

DISTRIBUTION UP TO FEEDER MARKETS/ MANDI TOWNS

LPD

March

2012

COVERAGE OF VILLAGES BASED ON THE POPULATION STRATA

HULS DISTRIBUTION STRATEGY 1. Operation harvest to extend distribution system to villages with population of 2000 and above persons. 2. Operation Bharat- to cover villages with a population of about 1000 persons. 3. Project Shakti- to cover villages with a population of less than 1000
LPD March 2012

USE OF COOPERTAIVE SOCIETIES

Cooperatives are linked with higher level societies at tehsil, district and state level helping for centralised procurements and distribution About 5 lakh cooperative societies operate in rural areas like marketing cooperatives, dairy cooperatives, credit cooperatives and other multi purpose cooperatives. About 670 lakh credit cards are been issued through cooperatives
LPD March 2012

PUBLIC DISTRIBUTION SYSTEMS

o PDS is a well organised distribution system with 4.5 lakh Fair Price Shops. o Aimed to reach remote areas like hills and tribal belts. o There is an arrangement for centralised procurement and distribution. o The purpose of PDS is to make available essential commodities like food grains, sugar edible oils soaps etc at reasonable prices
LPD March 2012

MULTI-PURPOSE DISTRIBUTION CENTRES

Petroleum /oil companies have evolved the concept of multi purpose distribution centers. In addition to petrol, diesel and lubricants these outlets stock consumable agricultural inputs like fertilizers, pesticides, seeds. About 450 outlets in operation in the country

LPD

March

2012

FEEDER MARKETS/MANDI TOWNS

Rural consumers visit mandi towns at regular intervals for selling the agro products as well as for buying cloths, jewellery, radio etc. Stockist or wholesalers and retailers arrange for distribution to the interior shops.
LPD March 2012

SHANDIES/HAATS/JATHRAS/MELAS
There are 47,000 shandies or haats and 25000 jathras held regularly. Shandies are held on a particular day every week, jathras are held once or twice a year for longer duration. The biggest fair , the Pushkar mela attracts estimated 10 milliion people. There are 50 such big rural fairs like kumbha mela at Sangam(near Allahabad)
LPD March 2012

Observations on Shandies: a) Average number of outlets per shandy 314. b) The daily average sale of Rs 2.13 lakh and the average sale per outlet Rs 874. c) The average number of persons visiting Shandy 4580 d) About 40% of the outlets selling agricultural commodities, 24% manufactured goods, 13% food, tea etc 8% handlooms and handicrafts, rest were entertainment and other services.
LPD March 2012

AGRICULTURE INPUT DEALERS

As per the Essential Commodities act, fertilizers should be made available to the farmers within a range of 4 to 5 kilometers from their place of residence. Their services can be best utilised to sell consumables and durables during off season.

LPD

March

2012

PROMOTION STRATEGY
TELEVISION (Door darshan: krishi Darshan) Hoardings.Wall paintings Shandies/haats/ jathras/melas Personal selling and using opinion leaders (used by mobile companies, farm equipment mfrs)

Cinema

Radio

Print Media

Soil testing/ free service weeks/ owners' meet(tractors) Other mass media handbills, booklets, Posters, Stickers, banners, Result and method demonstrations in farmers field, training programs, gift schemes, village adoption program(LIC, HLL, TATA), Agro techniques for cultivation
LPD March 2012