sp jain pricing workshop deepak bhatia

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Pricing Deepak Bhatia

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Page 1: SP JAIN PRICING WORKSHOP Deepak Bhatia

PricingDeepak Bhatia

Page 2: SP JAIN PRICING WORKSHOP Deepak Bhatia

A little bit about me…

Page 3: SP JAIN PRICING WORKSHOP Deepak Bhatia

My work experience so far …

Page 4: SP JAIN PRICING WORKSHOP Deepak Bhatia

So What is Pricing?

Page 5: SP JAIN PRICING WORKSHOP Deepak Bhatia

Its as simple as this…

Goods or

services

Value to custom

erCustomer Price

Page 6: SP JAIN PRICING WORKSHOP Deepak Bhatia

How did we price products in P&G/Pepsi?

Page 7: SP JAIN PRICING WORKSHOP Deepak Bhatia

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

Page 8: SP JAIN PRICING WORKSHOP Deepak Bhatia

But there was one thing we all used very effectively in India…

Page 9: SP JAIN PRICING WORKSHOP Deepak Bhatia

Affordability

Page 10: SP JAIN PRICING WORKSHOP Deepak Bhatia

“Paanch” or “Do” Rupaye or “Pachchees”

Page 11: SP JAIN PRICING WORKSHOP Deepak Bhatia

Videoshttps://youtu.be/QZWgamF8YwA

https://youtu.be/jmNrvlQ73pU

Coke

McAloo Tikki

https://youtu.be/jAKjI1kItDM Vodafone

Page 12: SP JAIN PRICING WORKSHOP Deepak Bhatia

Biggest Learning for most marketers in India was that end consumer price was defined by affordability

Page 13: SP JAIN PRICING WORKSHOP Deepak Bhatia

Lets look at Telecom

Page 14: SP JAIN PRICING WORKSHOP Deepak Bhatia

What was the price per minute when it was launched?

Page 15: SP JAIN PRICING WORKSHOP Deepak Bhatia
Page 16: SP JAIN PRICING WORKSHOP Deepak Bhatia

Clearly affordability scaled up the consumption & the subscriber base in the country

Page 17: SP JAIN PRICING WORKSHOP Deepak Bhatia

Chota Recharge to “Chutta” Recharge

Page 18: SP JAIN PRICING WORKSHOP Deepak Bhatia

But all this drove mass market consumption

Page 19: SP JAIN PRICING WORKSHOP Deepak Bhatia

What about the other segments?

Page 20: SP JAIN PRICING WORKSHOP Deepak Bhatia

In Telecom we divide our base into…• Low Value Subs• Medium Value Subs• High Value Subs• Ultra High Value Subs

Page 21: SP JAIN PRICING WORKSHOP Deepak Bhatia
Page 22: SP JAIN PRICING WORKSHOP Deepak Bhatia

Which is basically two key segments?• Mass

• Premium

Page 23: SP JAIN PRICING WORKSHOP Deepak Bhatia

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

Page 24: SP JAIN PRICING WORKSHOP Deepak Bhatia

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

Page 25: SP JAIN PRICING WORKSHOP Deepak Bhatia

What are the key objectives of any company ?

• Grow Revenues

• Lower costs

• Improve profitability

Page 26: SP JAIN PRICING WORKSHOP Deepak Bhatia

The way we price can impact all the 3 key levers of any business…

Page 27: SP JAIN PRICING WORKSHOP Deepak Bhatia

Revenues ?

REVENUES

Subs

Rate Per Min

Min Of

Usage

Page 28: SP JAIN PRICING WORKSHOP Deepak Bhatia

Biggest Disruption in the telecom pricing was that of …

Page 29: SP JAIN PRICING WORKSHOP Deepak Bhatia

Per Second Billing…

Page 30: SP JAIN PRICING WORKSHOP Deepak Bhatia

Suddenly …Over 25% of Revenues on a per sub basis disappeared from the market

Page 31: SP JAIN PRICING WORKSHOP Deepak Bhatia

New Operators used this technique to gain share including companies like Du in UAE & Tata Docomo in India

Page 32: SP JAIN PRICING WORKSHOP Deepak Bhatia

Another case of disruptive pricing• Whatsapp vs. SMS

• And one about to happen – 4G at 3G prices

Page 33: SP JAIN PRICING WORKSHOP Deepak Bhatia

So what will companies look for in students like you for developing their pricing strategies

Page 34: SP JAIN PRICING WORKSHOP Deepak Bhatia
Page 35: SP JAIN PRICING WORKSHOP Deepak Bhatia
Page 36: SP JAIN PRICING WORKSHOP Deepak Bhatia
Page 37: SP JAIN PRICING WORKSHOP Deepak Bhatia

https://youtu.be/4phxRH6vk-I

How to price your product ?

Page 38: SP JAIN PRICING WORKSHOP Deepak Bhatia

Clear Skills needed…• Strong analytical skills• EXTREMELY strong database skills• Sensitivity analysis

• AND LAST BUT VERY VERY IMPORTANT SKILL

Page 39: SP JAIN PRICING WORKSHOP Deepak Bhatia

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 …

Page 40: SP JAIN PRICING WORKSHOP Deepak Bhatia

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

Page 41: SP JAIN PRICING WORKSHOP Deepak Bhatia

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