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PRICING STRATEGIES

Price point of INR 5 has become a magic word for

marketers after the Coca Cola cam ai n.

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.

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ARGET PRICING

Rural consumers conscious of value for mone

Tata Nano

Gillette Guardo Blade and a plastic handle costing Rs. 15/-

o Each replaceable blade costing Rs.5/-

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SETTING THE PRICE FOR RURAL

Cost Price to at least cover the total costs fixed

and variable costs).

For rural areas there should be sufficient funds forpackaging, promotion and distribution.

Promotional Costs

o e ev s on pene ra on s s owo Rural people want, touch and feel.

,

be used where in people turn in large numbers.

Distribution Costso HUL made investments in channels like Project

Shakti .

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PRICING OBJECTIVES OF THE

As there is a trade off between the quality on offer

,

positioning.

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

er wa er.

Minimum Return on Sales Turnover .

Therefore pricing objectives need to cover

distribution, roduction and dealer mar ins.

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KEEPING UP WITH THE COMPETITION

Deeper penetration of the market Britannia

aunc e ger scu s a , an

price points.o In rural areas stiff competition to national players from

re ional and local la ers like Ghari Deter ent Wa h

Bakri Tea, Anchor toothpaste, Priyagold biscuits,Emami cosmetics, Parakh foods Maxo mosquito

repellent.

o Low production and distribution cost for the local

.

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PRICE SENSITIVITY OF CUSTOMERS

Self mana ed instalment scheme

Chic Shampoo

Ghari DetergentFena washing soaps

CHANNEL COSTSDistribution costs are important as there are

6,00,000 villages to be reached.

Retailers in the village has to extend credit

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COMPETITION

creates a pricing standard

define the competition

ENVIRONMENT

Government policies, change in the economy, andnew technology are the main factors affecting the

pr ce.o Poor monsoon and crop failure decreases purchasing

.

o Technology Godrej Chotukool, Nokias simple

handsets.

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PRICE SETTING STRATEGIES

Market Entry Strategieso Skimming Pricing - P&G introduced Ariel and Tide

and high prices

o Penetration Pricing Anchor white and Ajantaoo pas e

Product Mix Pricing Strategies - , ,

Videocon.

o Ca tive roduct ricin BSNL offered free telephone connections

ITC e Choupal levied no charges for extending Internet

o Product bundle pricingUsed by companies during festival and marriage seasons.

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Price adjustment strategieso Discounts and allowances

Cash discounts - retailers to be given enough margins so thatcash discounts can be given to the consumers

Quantity discounts Providing more quantity for the same

price good knight mosquito coil 1+1 scheme

o Freebies Tooth brush with toothpaste

Cup with tea

eg ona an oca ran s ave a vantage as t e r e verysystem ensures that the gift reaches the customer.

National players

Retailers replace the gift with an inferior one

Customers are ignorant

The gift is inserted in the main pack

Picture of gift printed on the pack of the core product

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Special Event Pricing

o Hero Honda Van campaignBookings against deposits of INR 500 and gave a watch free

.

o Economy Pricing

Frills are removedMaharaja 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 thanother bikes.

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 Pointso Help market penetration

o Low price packs maintain freshness

o Customer have more choiceo ara pe ro eum n ro uce g m n gas cy n ers

priced at INR 100 to reduce initial deposits and refill costs

.

o Godrej Selling Expert hair colour and Nupur Henna at INR5 and INR 10.

o Nestea @ 2 and 10

o CavinKare sells Nile and Chik shampoo at 50 paise andpac s

o Frito lay and Kurkure at 3 and 5

.

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Low cost packaging Britannias Tiger Biscuits

Refillable/Reusable packso Fertilisers in refillable packs

o Hero Honda highlighting mileage, lower maintenance

,

Coinage Pricingo Coca Cola, Pe sodent, Ponds Dream flower, Ponds

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

ro uc ar ng erv ceso HPCL Rasoi Ghar Model

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