2. How Consumers arrive at their Perception of Price
Reference Prices:
1. Consumers have fair knowledge about the prices
2. But they cannot recall accurate price
Price Cues: compared before making purchase decision
3. Prices areInference:
Price-Quality is also affected by pricing strategies
1. a. Internal reference price (memory)
Perception
1. Consumers use priceodd an indicator of quality
2. b. External reference price (regularDifference in
Prices should end in as number. price)
2. When info about true quality is available, price
perception of Rs2,999 and Rs3,000.
3. becomes irrelevant‘0’ and ‘5’ are easily remembered.
Prices ending with
4. The sign ‘Sale’ also spurs demand.
Note: Sellers put their products in expensive class for
consumers to believe that it belongs to the same class
3. Setting The Price
Estimating Costs
Price Method Demand
1. Accumulated production leads to decline in
Determining Selection
Setting the price objective
1. Understandexperience
Markup Price
costs with price sensitivity
1. Survival Analysing Competitor
Selecting Final Price
2. Cost Costing
Target Return
1. Price Elasticity Price (ROI) activities
2. Maximum current profit
1. Impact of other marketing
Perceive demand curves
3. Prices of Value
Types
2. Estimatingcost Pricing
3. Maximum market share
2. Company pricing policies
4. Offer Pricing Low Pricing (Big
Value
a. Statistical Analysis
Fixed
3. Maximum Cost oron other parties Bazar)
4. Impact ofmarket skimming
3.
price
5. b. Experiments
Going Rate Cost ( Competitor’s Price)
Variable Pricing
5. Product-Quality leadership
6. c. Surveys
Auction Pricing
Total Cost
6. Other objectives like cost recovery
d. Average Cost
