PRICING OBJECTIVES

Pricing Strategies• Once businesses know the

minimum price they can charge they will develop a pricing strategy– A plan to price a product to

achieve specific marketing objective

• There are 3 main Pricing Strategies– Market Skimming– Penetration Pricing– Competitive Pricing

Pricing Method• Value Pricing• Promotional Pricing• Loss-Leader Pricing • Special Event Pricing

Other pricing strategies:Buy more, save more Prices reduced on a combination Holding special discountsHighlighting the savings possible The Price Challenge Offer

Advertising Advertising is the essential component of brand building . the advertisement is done through various ways, techniques used are:

Tag-line Print-ads TV-ads Road side hoarding Radio adsFashion shows Brand endorsement by celebrity.

Use of Advanced Technology

Product Life Cycle

Product Complexity

Channels of Distribution

Quality Requirements

Product Diversity

0

100

1 2 3 4

Composition of Cost

Direct Material Labour Overheads

Conventional Costing

Expenses

Cost Objects

AB Costing

Resources

Activities

Cost Objects

Economic Element

Work Performed

Product or service

Total Cost(Material + Labour+ Overheads)

Business Level Strategies

Two Generic Business Level StrategiesCost Leadership:

• generate economic value by having lower costs

than competitors

Product Differentiation:

• generate economic value by offering a product

that customers prefer over competitors’ product

Example: Wal-Mart

Example: Harley-Davidson

Value of a Cost Advantage

Rivalry

Entry Buyers

SuppliersSubstitutes

• increases capitalrequirementsfor entrants

competitors rationallyavoid price competition

• limits attractivenessof substitutes

• increasesimportance of the

focal firm to thesupplier

• lowers incentivesfor buyers to

verticallyintegrate

Production

Finance

R&D

Accounting MarketingHuman

Resources

Chief Executive Officer

Functional Structure

Organizational Structure

Mission / Vision / Positioning And Establishment

VISION Future Group shall deliver Everything, Everywhere, Every time for Every Indian Consumer in the most profitable manner.

MISSION We share the vision and belief that our customers and stakeholders shall be served only by creating and executing future scenarios in the consumption space leading to economic development.

Customers Segmentation Big Bazaar targets higher and upper middle class customers. The large and growing young working population is a

preferred customer segment. Big Bazaar specifically targets working women and home

makers who are the primary decision makers.

Swot Analysis

Physical Evidence

People

Place Promotion

Price

Product

Process

7 ‘P’ Marketing Mix

DEVELOPMENT AND EVOLUTION OF RETAIL

Traditional

Daily Reach

Govt. Support

Modern Formats

Weekly Markets

Village Fairs, Melas

Local Kiranas

PDS

Cooperatives

Hypermarkets, Supermarkets, Departmental Stores etc

Shopping & entertainment

Neighborhood & Convenience

Low Price

Shopping experience& efficiency

Rural Retail Adhaar, Hariyali etc New Experience

1) Identifying a Target Market

2) Selecting a Product Strategy

3) Selecting a Customer Service Strategy

4) Selecting a Pricing Strategy

5) Choosing a Location

6) Building a Promotional Strategy

7) Creating a Store Atmosphere

How Retailers Compete

Retail Locations Planned Shopping Center Shopping Mall Regional Mall Lifestyle Mall

Employee Type & DensityEmployee Type & Density

Merchandise Type & DensityMerchandise Type & Density

Fixture Type & DensityFixture Type & Density

SoundSound

OdorsOdors

Visual FactorsVisual Factors

Factors in Creating Store’s

Atmosphere

How manyHow many

How knowledgeableHow knowledgeable

How helpful / invasiveHow helpful / invasive

Fit the image of the productFit the image of the product

Good personal sellersGood personal sellers

Factors in Personal decisions

Areas of Retail Operation covered

• Check out Management

• Stores Administration & Facilities Management

• Loss ( Shrinkage ) Prevention.

• Visual Merchandising and Displays.

Stores Operating Parameters- Stocks

• Avg. Selling PriceTotal value of goods sold ÷ Total Qty. Sold

• Avg. Stock Price

Total value of goods in stock ÷ Total Qty. in stock

• Stock Turnover/ Inventory Turnover RatioNet Sales ÷ Avg. Retail value of inventory

• Percentage Inventory Carrying Cost(Inventory Carrying Cost ÷ Net Sales) * 100

Stores Operating Parameters- Stocks

• Gross Margin Return on inventory

Gross Margin ÷ Avg. Value of Inventory

• Mark Down Goods Percentage

(Net Sales at Mark Down ÷ Total Net Sales) * 100

• Shrinkage to Net Sales

(Actual Inventory – Booked Inventory)

-------------------------------------------------- * 100

Net Sales

Stores Operating Parameters- Employees

• Gross Margin per full time employee

Total Gross Margin ÷ Total no. of FT employees

• Suppliers /Quantity or Value purchased per buyer

Total Suppliers /Quantity or Value purchased ÷ Total no. Buyers

Cash Register Express

Cash Register Express (or CRE) is a cost-effective computerized cash register that keeps your inventory costs down, reduces theft and makes more money!

CRE is Windows-based POS system exclusively for retail and video stores.

Features : Easy to use: Fast lookups by barcode or name Built-in help system Bar-code ready  Credit card processing with IC Verify  Built-in backup 

Salesperson tracking Time clock  Handles multiple clerks  Handles multiple cash drawers  Password protection 

Check out Management

    Broad compatibility       Microsoft Access compatible       Quickbooks compatible 

   Helps manage customer accounts      Detailed customer history       Customer quick search  Promotions for preferred customers        Family memberships        Coupon plans        Gift certificates        Mailing labels

   Management flexibility       Flexible pricing       Flexible taxing 

   Sophisticated reporting       Detailed inventory reports       Management reports       Financial summaries

Check out Management

Assessing and responding to a competitor’s price cut (depending on the market structure)

• Factors that we expect to affect the demand for the good include:

· Population (n) · Price of the good (pi)

· Price of other goods (pj) · Income (y)• Expectations of future prices· Tastes (T)

Pricing Strategies

Value Pricing

Contribution Pricing

• Contribution = Selling Price – Variable (direct costs)

• Prices set to ensure coverage of variable costs and a ‘contribution’ to the fixed costs

• Similar in principle to marginal cost pricing• Break-even analysis might be useful in such

circumstances

Cost-Plus Pricing

• Calculation of the average cost (AC) plus a mark up

• AC = Total Cost/Output