Pricing Decisions

Pricing strategy refers to method companies use to price their products or services. Almost all companies, large or small, base the price of their products and services on production, labor and advertising expenses and then add on a certain percentage so they can make a profit. There are several different pricing strategies, such as penetration pricing, price skimming, discount pricing, product life cycle pricing and even competitive pricing.  Pricing should take into account the following factors:

1. Fixed and variable costs.
2. Competition
3. Company objectives
4. Proposed positioning strategies.
5. Target group and willingness to pay.

With respect kinley For 500ml pack, the company offered an introductory price of Rs. 4 which was against the price of Rs. 5 for 500ml Bisleri pack. With national rollout in consecutive months, pricing played a significant role for Kinley. For rural areas, Kinley introduced 200ml pouch at an attractive price of Re.1. Simultaneously, the company launched 200ml water cups priced at Rs. 3 per cup. Till 2003, the one litre bottle was available for Rs.10 the other being Bisleri for the same price. In 2009 when Pepsi co’s Aquafina and Parle’s Bisleri hiked prices from Rs. 8 to Rs. 10 for 500ml, Coke’s Kinley was still available for Rs. 5 in Delhi and for Rs. 8 in many other parts of the country.

Pricing strategy should be an integral part of the market- positioning decision, which in turn depends, to a great extent, on your overall business development strategy and marketing plans.

Geographical Pricing- Geographical pricing involves the company in deciding how to price its products to different. Customers in different locations and countries. For example in the case of Kinley, the price of kinley 500ml varies in different parts of the country as discussed earlier. 

Price allowances and discounts - The role of discount Offering discounts can be a useful tactic in response to aggressive competition by a competitor. However, discounting can be dangerous unless carefully controlled and conceived as part of your overall marketing strategy. Discounting is common in many industries – in some it is so endemic as to render normal price lists practically meaningless. This is not to say that there is anything particularly wrong with price discounting provided that you are getting something specific that you want in return. Promotional-pricing strategies are often a zero-sum game. If they work, competitors Copy them and they lose their effectiveness. If they do not work, they waste money that could have been put into other marketing tools, such as building up product quality and service or strengthening product image through advertising.

Companies often adjust their basic price to accommodate differences in customers, products, locations, and so on. Price discrimination occurs when a company sells a product or service at two or more prices that do not reflect a proportional difference in costs.

Location Pricing: - The same product is priced differently at different locations even though the cost of offering at each location is the same. A theater varies its seat prices according to audience preferences for different locations. Kinley at regular grocery store will be sold at its mrp but at locations such as theatres, events etc will be sold at higher price.