would lead to higher sales it is also possible that a reduced price may have a

Would lead to higher sales it is also possible that a

This preview shows page 58 - 61 out of 203 pages.

would lead to higher sales, it is also possible that a reduced price may have a negative connotation regarding quality, hence a sudden reduction in the price of an existing product may have a negative impact on sales. Similarly if buyers equate a high price with better quality an increase in price may actually attract more customers. At times the cost to a customer can be more than the actual price example for a DVD player it may be also the cost of CDs, or in the case of a camera, the cost of the films may have to be added. Pricing Contexts Pricing is not just a cost driven exercise but a skill that requires knowledge and understanding of both customers and external environments Consumer Markets There is always keen competition for consumer’s disposable income. Consumers also have a lot of discretion over whether they spend or not. 58
Image of page 58
PRICING At times consumers buy because they 'want to', rather than they 'need to'. Normally in consumer markets, scope for price negotiation is not substantial, except in certain cases, such as cars or appliances. Price banding can also be useful in the consumer market, example, consumers may decide on a price band of say Rs. 100 to Rs. 150 within which to buy T shirts, hence the marketer knowing the most common bands may price products accordingly. There can be times, when customers may have price as the main consideration while buying. These are instances when they are price sensitive. Retail and Wholesale Markets Intermediaries take a more rational approach to pricing. They have to look both at the manufacturers as well as the consumers. Price discipline is expected by resellers as manufacturers should not be seen to be selling cheaper than the intermediaries. Intermediaries being aware about alternative price offerings can bargain better and manufacturers make concessions to secure patronage of powerful retail chains. Service Markets Since a service is more intangible, it is often difficult to assess quality before purchasing. Price comparison is the nearest a potential buyer can get, example of 2 restaurants offering same product and same environment, the costlier one may predict better taste/larger serving/ better ingredients. At times for high end services like special dentistry, or hair styling cum dressing, where resources are limited, a high price structure can be used to preclude demand. Non Profit Markets Non profit organizations differ from others in as much as, they see themselves as existing and operating for the benefits of the public rather than for the creation of profits. 59
Image of page 59
PRICING Their objectives are to encourage people to use their services/products/ participate in their activities. Pricing here plays a major role to demonstrate that the offerings are at below market rates.
Image of page 60
Image of page 61

You've reached the end of your free preview.

Want to read all 203 pages?

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes
A+ icon
Ask Expert Tutors