95_Srivasan.docx - SUSTAINABLE PRICING VALUE VIA...

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SUSTAINABLE PRICING - VALUE VIA SUSTAINABLE PRICING STRATEGIES, SOURCES AND IMPACT OF ECO COST SRIVASAN B 215120095 INTRODUCTION Recovering the Real Product Cost is termed as Sustainable Pricing. A sustainable price accounts fully for the economic, environmental and social costs of a product's manufacture and marketing while providing value for customers and a fair profit for business. Companies that have realized a sustainable, fully integrated, world-class pricing competency can accelerate improvement in areas like including route-to-market channel optimization, key sales account planning, management and customer contract negotiations, Sales and Operations Business Planning, and product portfolio management. The motivation behind sustainable pricing is driven by the need for environmental protection and prevention of damage to the environment by environmentally conscious consumers, like true blue and LOHAS individuals, and the market for such consumers. When it comes to product placement and sales, sustainability concepts can rather be a key product/price differentiator. Focusing on environmental responsibilities involves evolving to eco- friendly manufacturing methods, providing workers training, and reducing the movement of raw materials and products. Fig 1: The sustainable business strategy matrix. Sustainable business strategy is the integration of economic, environmental, and social aims into a firm's goals, activities, and planning, with the aim of creating long-term value for the firm, its stakeholders, and the wider society. PRICING STRATEGIES Firm will use strategies according to their position in the market. In the book, “Smart Pricing” the authors describe the challenges facing traditional pricing strategies. Cost-Plus Pricing receives least amount of attention. Leveraging a sustainability, the key is to create consumer value for the cost, emphasizing the sourcing of sustainable materials and services and looking for energy and process efficiencies to reduce total cost. Competition-Based Pricing is a more reactive strategy seen in fierce/low profit markets. The key in this strategy is to create consumer loyalty, leveraging sustainability as a key differentiator. Consumer-Based Pricing is the most aligned strategy with consumer engagement. In this the key to create two-way dialog with your stakeholders to ensure sustainable expectations and offerings are discussed. Types of pricing strategies include carbon offset pricing, competitive pricing, and product line pricing. Carbon offset pricing refers to situations under which the marketer of a product enables the purchaser to compensate for the greenhouse gas emissions associated with consumption. Competitive pricing is a pricing strategy based on the firm s position in the market. These strategies include break-even pricing, cost-based pricing, value-based pricing, status quo pricing, skimming, and penetration pricing.

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