PRICING DECISIONS
Pricing is the process of determining what a company will receive in exchange for its products.
Traditionally Price has been a major determinant of a buyers choice.
Consumer Buying Psychology:
Reference Prices: Consumers have fairly good idea of the price range of a product, but rarely do they recollect the exact price. When examining a product, consumers often employ Reference Prices, where the compare the observed price to an internal reference price.
For example : Britannia butter is priced at Rs. 30/- for 100gms and Amul butter is priced at Rs. 28/- for 100 gms. So the price range that a buyer will have in his mind will be somwhere in between 25 and 30. Hence the company has to price the product in this range, taking into consideration the competition, its profits etc.
Price- Quality inferences: Many consumers use price as an indicator of quality. Some brands adopt exclusivity and scarcity as a means to signify uniqueness and justify premium pricing. For ex:
Traditionally Price has been a major determinant of a buyers choice.
Consumer Buying Psychology:
Reference Prices: Consumers have fairly good idea of the price range of a product, but rarely do they recollect the exact price. When examining a product, consumers often employ Reference Prices, where the compare the observed price to an internal reference price.
For example : Britannia butter is priced at Rs. 30/- for 100gms and Amul butter is priced at Rs. 28/- for 100 gms. So the price range that a buyer will have in his mind will be somwhere in between 25 and 30. Hence the company has to price the product in this range, taking into consideration the competition, its profits etc.
Price- Quality inferences: Many consumers use price as an indicator of quality. Some brands adopt exclusivity and scarcity as a means to signify uniqueness and justify premium pricing. For ex:
Watches, perfumes etc.
Price cues: Many sellers believe that prices should end in an odd number because for example: many customers see an amplifier priced 2999/- in the range of 2000/- rather than rounding it off to
Price cues: Many sellers believe that prices should end in an odd number because for example: many customers see an amplifier priced 2999/- in the range of 2000/- rather than rounding it off to
3000/-
But prices ending in 5 or 0 are easier for the customer to process and retrieve from memory.
Also the sign of SALE next to a price is shown to spur demand if not over done. Even limited availability (3 days only) is seen to have spurred sales.
But prices ending in 5 or 0 are easier for the customer to process and retrieve from memory.
Also the sign of SALE next to a price is shown to spur demand if not over done. Even limited availability (3 days only) is seen to have spurred sales.
Pricing for Lux Soaps:
At the time Lux was formed, consumers had limited purchasing power, and modest consumption levels of bath products. Thus Lux adopted a low-cost price strategy to make its products affordable and attractive to consumers by guaranteeing them value for money.Despite competition in the high value bathing segments from firms it ensured that the product mix and the sequence in which LUX introduces its products is consistent with the core philosophy of providing luxurious bathing soaps at affordable price to appeal the common masses. This helped LUX SOAPS to create its brand image in the household sector of the society.
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