Principles of Pricing•Fixed margin oriented Pricing.

•Minimum margin oriented Pricing.•Reducing margin = reducing cost Pricing(10-

15%)•Avoid Under Pricing.

•Overall pricing against individual Pricing.

1 Demand Factor1. Elasticity of

Demand. 2. Cross Elasticity3. Customer Value

perceptions.

2 Strategy Issue1. Target Market

Selection2. Product Positioning3. Price Objective4. Marketing program

3 Structure of

Competition. Entry barriers. Rival strategy.

4 Strategy Issue1. Target Market

Selection2. Product Positioning3. Price Objective4. Marketing program

5 Trade Factor1. Power in the

channel2. Traditions and

Roles.3. Margins.

6 Legal factors1. Vertical restriction.2. Price discrimination

Evaluation and formation of Pricing Policy.

ANDDecide the price.

Increase profitability by X % over the next period/years.

To get foothold in the market. Invite competitors to accept as market leader

in the chosen segment or as corporate. Increase marker share to X %. Regularize the consistent purchase. Restore the order in volatile market

situations. Reduce inventory without damaging the

brand image at trade relations.

1. Pricing in monopoly trade situation2. Pricing in Demand and supply situation3. Pricing at dramatic and discontinuous

situation.4. Pricing at break even situation5. Pricing in Vertical

restriction/Territorial/Location/Customer restriction.

6. Pricing at Push and Pull situation7. Pricing at Bidding and Negotiation8. Pricing at Global pricing contracts

1. The products or services are in significant demand.

2. Local market is reasonably homogeneous.3. Customer Top management is committed.4. Customer seeks value enhancement

more than cost cutting.5. Supplier has good working relationship

not at Head Quarters but with the respective country managers.

6. Customer and supplier have some implementation experiences with global strategy played out at local levels.