Break Even Analysis & Pricing Decision-ppt

8/4/2019 Break Even Analysis & Pricing Decision-ppt

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Break Even Analysis & Market decisionPricing

Presented By:

VIVEK PANDEY (MO91083)

MUKESH PANDEY (MO91081) PRAJWAL PATHAK(MO91084)

Dhara

A Project on



Factors Affecting PriceDecisions

Internal Factors

Marketing ObjectivesMarketing Mix StrategyCostsOrganizational

considerations

External Factors

Nature of the marketand demand

CompetitionOther environmentalfactors (economy,

resellers, government)

PricingDecisions



Marketing

Objectives

SurvivalLow Prices to Cover Variable Costs andSome Fixed Costs to Stay in Business.

Current Profit Maximization Choose the Price that Produces the

Maximum Current Profit, Etc.

Market Share Leadership

Low as Possible Prices to Becomethe Market Share Leader.

Product Quality LeadershipHigh Prices to Cover Higher

Performance Quality and R & D.

Internal Factors Affecting PricingDecisions: Marketing Objectives



Price

Product Design

Distribution

Promotion

NonpricePositions

Internal Factors Affecting PricingDecisions: Marketing Mix



Market andDemand

Competitors’ Costs,Prices, and Offers

Other External FactorsEconomic ConditionsReseller Needs

Government ActionsSocial Concerns

External Factors AffectingPricing Decisions

Competitor Costs

This ad by LCI International accuses its competitors of using

unfair practices in pricing, hiding fees incurred by rounding up.

Hidden fees, defined as

“cramming” by the

FCC, are the number

one source of billing

complaints among

long-distance

customers.

Why is LCI focusing on

this practice?



Pure CompetitionMany Buyers and Sellers

Who Have LittleEffect on the Price

MonopolisticCompetition

Many Buyers and SellersWho Trade Over a

Range of Prices

Pricing in Different Types of Markets

Market and Demand FactorsAffecting Pricing Decisions

OligopolisticCompetition

Few Sellers Who AreSensitive to Each Other’s

Pricing/ MarketingStrategies

Pure MonopolySingle Seller



Major Considerations in SettingPrice



Cost-Based Pricing

Certainty AboutCosts

Pricing isSimplified

Price CompetitionIs Minimized

U n e x p e c t e d S i t u a t i o n a l F a c t o r s

Attitudes

of Others

Ethical

IgnoresCurrent

Demand & Competition

Cost-PlusPricing is an Approach That

Adds aStandard

Markup to theCost of theProduct.

Simplest

PricingMethod

Much Fairer to

Buyers & Sellers



Product

Cost

Price

Value

Customers

Customer

Value

Price

Cost

Product

Cost-Based Pricing Value-Based Pricing

Cost-Based Versus Value-BasedPricing



Setting Prices

Sealed-BidCompany Sets Prices Based onWhat They Think Competitors

Will Charge.

Going-RateCompany Sets Prices Based on What

Competitors Are Charging.

?

?

Competition-Based Pricing



New Product Pricing Strategies

Market Skimming

Setting a High Pricefor a New Product to“Skim” MaximumRevenues from theTarget Market.

Results in Fewer, ButMore Profitable Sales.

Use Under TheseConditions:

Product’s Quality andImage Must Support ItsHigher Price.Costs Can’t be so Highthat They Cancel theAdvantage of ChargingMore.Competitors Shouldn’t beAble to Enter MarketEasily and Undercut theHigh Price.



New Product Pricing Strategies

Market Penetration

Setting a Low Price for aNew Product in Order to“Penetrate” the MarketQuickly and Deeply.

Attract a Large Numberof Buyers and Win aLarger Market Share.

Use Under TheseConditions:

Market Must be HighlyPrice-Sensitive so a LowPrice Produces MoreMarket Growth.Production/ DistributionCosts Must Fall as SalesVolume Increases.Must Keep OutCompetition & MaintainIts Low Price Position orBenefits May Only be

Temporary.



Product Mix-PricingStrategies:Product Line Pricing

Involves setting pricesteps between various

products in a productline based on:Cost differencesbetween products,

Customer evaluations ofdifferent features, and

competitors’ prices.



Product Mix- Pricing Strategies

Optional-ProductPricing optional or

accessory productssold with the mainproduct. i.e camera bag.

Captive-ProductPricing products thatmust be used with themain product. i.e. film.



Product Mix- Pricing

StrategiesBy-Product

Pricing low-valueby-products to getrid of them andmake the mainproduct’s pricemore competitive.

i.e. sawdust, ZooDoo

Product-BundlingCombining severalproducts andoffering thebundle at areduced price.

i.e. theater seasontickets.



Discount and Allowance Pricing

Cash Discount Seasonal Discount

Quantity Discount Trade-In Allowance

Functional Discount Promotional Allowance

Adjusting Basic Price to Reward Customers

For Certain Responses



Psychological Pricing

Considers the psychology ofprices and not simply theeconomics.

Customers use price lesswhen they can judge qualityof a product.

Price becomes an important

quality signal whencustomers can’t judgequality; price is used to saysomething about a product.



Special-Event Pricing

Cash Rebates

Low-Interest Financing

Longer Warranties

Free Merchandise

Discounts

Loss Leaders Temporarily PricingProducts Below List

Price to IncreaseShort-Term Sales

Through:

Promotional Pricing



Special-Event Pricing

Cash Rebates

Low-Interest Financing

Longer Warranties

Free Merchandise

Discounts

Loss Leaders Temporarily PricingProducts Below List

Price to IncreaseShort-Term Sales

Through:

Promotional Pricing



Documents

Break Even Analysis & Pricing Decision-ppt