sp jain pricing workshop deepak bhatia
TRANSCRIPT
PricingDeepak Bhatia
A little bit about me…
My work experience so far …
So What is Pricing?
Its as simple as this…
Goods or
services
Value to custom
erCustomer Price
How did we price products in P&G/Pepsi?
Parameters used• Size of the SKU – Bottle/Sachet/Packet etc• Volume per SKU – ml/Kg• Manufacturing & Packaging costs• Research & Development costs • Sales & Distribution Costs• Advertising and branding costs• Competition pricing• Incremental benefits compared to other products in the same
category• Etc etc … anything that directly or indirectly adds to the cost of the
product on a fixed or variable basis
But there was one thing we all used very effectively in India…
Affordability
“Paanch” or “Do” Rupaye or “Pachchees”
Videoshttps://youtu.be/QZWgamF8YwA
https://youtu.be/jmNrvlQ73pU
Coke
McAloo Tikki
https://youtu.be/jAKjI1kItDM Vodafone
Biggest Learning for most marketers in India was that end consumer price was defined by affordability
Lets look at Telecom
What was the price per minute when it was launched?
Clearly affordability scaled up the consumption & the subscriber base in the country
Chota Recharge to “Chutta” Recharge
But all this drove mass market consumption
What about the other segments?
In Telecom we divide our base into…• Low Value Subs• Medium Value Subs• High Value Subs• Ultra High Value Subs
Which is basically two key segments?• Mass
• Premium
Our Current Market share also defined our pricing in the relevant markets• If we were a distant #2 – Value pricing for most of the
base• If we were market leaders – premium pricing for most
of the base• If we were just a new entrant in a market – loss
leader/marginal cost pricing on certain line items
An interesting concept in Telecom• GEOGRAPHY BASED PRICING1. Home Zone – Rural vs. Urban2. Low Market share districts – differential pricing vs.
high market share districts3. College campus pricing vs. home use pricing
What are the key objectives of any company ?
• Grow Revenues
• Lower costs
• Improve profitability
The way we price can impact all the 3 key levers of any business…
Revenues ?
REVENUES
Subs
Rate Per Min
Min Of
Usage
Biggest Disruption in the telecom pricing was that of …
Per Second Billing…
Suddenly …Over 25% of Revenues on a per sub basis disappeared from the market
New Operators used this technique to gain share including companies like Du in UAE & Tata Docomo in India
Another case of disruptive pricing• Whatsapp vs. SMS
• And one about to happen – 4G at 3G prices
So what will companies look for in students like you for developing their pricing strategies
Clear Skills needed…• Strong analytical skills• EXTREMELY strong database skills• Sensitivity analysis
• AND LAST BUT VERY VERY IMPORTANT SKILL
STRONG PRESENTATION SKILLS to convert large numerical data with analysis into meaningful visual charts for management to take decisions without getting into HOW the data was crunched but WHAT to do next …
Case Study - 1• You are a number 4 operator launching in a market
that is having 100% penetration of subscribers in the TOP 3 operators.• The Telecom Regulatory controls pricing decisions with
pre approvals needed before launch• You have a weaker network in rural compared to urban• The Top 3 operators have enough margins to match
your pricing instantly and sustain it till you budge• You need to hit a 10% market share in year 1 of launch
Case Study - 2• You are launching a new shampoo in the market• The Top 3 Brands occupy close to 90% share of
revenues• They are more well distributed than any other product
category of the same price points• Their Advertising muscle is 5 times that of any new
player• They have a kitty of new innovations waiting to be
introduced to attack any new comer in this category