This document discusses various pricing concepts and methods in marketing management. It defines key terms like price and pricing. It outlines common pricing objectives like maximizing profit and increasing market share. Some pricing policies are also mentioned like flexible pricing and bundle pricing. The document then describes the steps to set a price and various pricing methods such as mark-up pricing, perceived value pricing, going rate pricing, target return pricing, and break-even pricing. It concludes by listing several pricing strategies used in business.

1. MARKETING MANAGEMENT

2. FR
Meaning
• PRICE - The amount of money
for which something is buy or
sell.
• PRICING – The method of
determining the value, a
producer will get in the
exchange off goods &
services.

3. FRPRICING OBJECTIVES
Objectives
Profit-related
Maximize the
profit
High ROI
Sales-related
Increase in
market share
Increase sales
Competition-
related
Keep
competitors
away
Achieve quality
leadership
Customer-
related
Satisfy
customers
Win confidence
of customers
Others
Price stability
Survival &
Growth

4. FRPRICING POLICIES
Flexible
price
One price
Prestige
price
Odd/Even
price
Multiple-
price
Bundle
Price
lining

5. FRSETTING THE PRICE STEPS
Select the pricing
objective
Determine demand Estimate costs
Analysis competitors
price mix
Select the price
method
Select the final price

6. FRPRICING METHODS
PRICING
METHODS
Mark-up
Pricing
Perceived-
value pricing
Going-rate
pricing
Sealed-Bid
pricing
Target-return
pricing
Break-even
pricing

7. FRMark-up pricing
• Adding certain % of a mark-up (profit) to cost to get the selling price
• Mark-up price = unit cost/1 – desired return
• E.G. : Unit cost = ₹ 40; Desired return = 20%
Sol: Mark-up price = 40/1 – 0.2 = ₹ 50
Here, mark-up is ₹ 10 & cost = ₹ 40
• Used in construction business even in consumer goods
Perceived–value Pricing
• pricing a product on the basis of what the customer is ready to pay for it
• a firm sets the price of a product by considering what product image a customer carries in his mind and how much he is willing to pay for it.
• Basically, price set on the basis of perception of customers towards that product
• E.G.: John Deere Tractor perceived value – durability, reliability, service, larger warranty etc…

8. FR
Going-rate pricing
• Price set on the basis of market price
• Basically, the company sets a price of its products and services in line with the competitor’s prices, and may sometimes charge more or less depending on the value, product offers.
• Used for Homogenous & oligopolistic industries
• E.G.: Telecom industry, Banking Industry, Electronic goods etc..
Sealed-Bid Pricing
• Price set on the basis of bidding
• The method is very common in the case of Government or industrial purchases, wherein tenders are floated in the market, and potential suppliers submit their bids in a closed envelope, not
disclosing the bid to anyone.
• Used for construction or contract based business.

9. FR
Target-return pricing
• Price set on the basis of target ROI
• Target-Return Pricing = unit cost + (desired return x invested capital)/unit sales
• E.G.: Unit cost = ₹ 10; expected sales = 20,000 units; investment = ₹ 10,00,000; ROI = 10%
• Sol: Target-return pricing = 10 + (0.1 × 10,00.000)/20,000 = ₹ 15
Break-even Pricing
• Price set at which point where product will earn zero profit.
• Because at that point total sales = total cost
• Break-even price = Fixed cost + Variable cost
• E.G.: Fixed cost = ₹ 20; Variable cost = ₹ 10
• Sol: Break-even price = 20 + 10 = ₹ 30

10. FRPRICING STRATEGY
Pricing
strategy
Premium
pricing
Penetration
pricing
Economy
pricing
Skimming
pricing
Psychological
pricing
Product line
pricing
Promotional
pricing

11. FR