Price strategies

1. Marketing Management
Unit 2.2 Pricing Strategies
EMBA & HTM, IMTVU, Gujarat
Prof.(Dr) Madhusudan Rao, Datrika
PhD, MBA, MPhil, MSc (Psy), UGC-NET, APSET,
PGDFTM, PGDIPR, DCA, MCIM(UK), Affi. CIPD(UK)

2. Syllabus
Pricing Decisions:
Factors affecting price determination;
Pricing policies and strategies;
Discounts and rebates

4. The Four Ps

5. 7Ps & 7Cs
The 7 Ps The 7 Cs
Organisation Facing Customer Facing
Product = Customer/ Consumer
Price = Cost
Place = Convenience
Promotion = Communication
People = Caring
Processes = Co-ordinated
Physical Evidence = Confirmation

18. Objectives of Price decisions
The following are the objectives of price policy of a firm:
1. Return of Investment: A business organization must have minimum return on its
investment. E.g.,10% to 20% after-tax. This rate is to be decided by the management and
followed in pricing policy.
2. Maximization of profit: Pricing policy directly affects the earnings of the concern and,
therefore, its successful functioning. Hence, the first objective of a price policy should be the
maximum of profit for the firm.
3. Acquiring market position: The second objective of price policy is to acquire a position in
the market. Hence a firm should prepare its pricing policies keeping in mind this objective
also.
4. Price stabilization: The price fixed once should be reasonably stabilized as it gives a
continuous income to the firm and brings reputation also. It is possible only when all short term
and long term aspects are taken into account while fixing prices.
5. Charging according to ‘Ability to pay’: The firm should fix its prices in such a manner
that ‘ability to pay’ principle of taxation is followed. It helps in maximization of earnings.
6. Facing the competition: The price policy of a firm should aim at facing the competition
successfully.
7. Long-run welfare of firm: The next objectives of price policy of a firm should be its long-
run welfare.

20. Information needed for price decisions are:
“Our policy is to reduce price, extend operations and improve the product” - Henry Ford
It shows the importance of pricing decisions in a marketing–mix.
I. Information regarding the product:
a. cost data of product
b. excise duty and octroi or any other production tax
c. government price control regulations if any
d. packaging requirements of a product
e. after-sales-service to be provided to customers (especially consumer durables T.V, V.C.R. etc)
f. economic burden of the rejected and Seconds goods or the faulty goods
II. Information regarding the market:
a. prices of competitors products and substitute products
b. main competitors
c. production figures of the country
d. consumption trend of the consumers
e. terms and conditions of sales
f. attraction of customers towards the company’s product/brand loyalty
g. commission or margin of profit to be offered to middlemen for their services
III. Information regarding the firm:
a. production capacity of the plant
b. firm’s share in the total market
c. good will or popularity of the firm in the market.

132. Q & A
madhu4m@gmail.com
Cell: 09701877449
25-05-2023 132