Pricing Decisions

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 curd is priced at Rs. 40/- for 400gm and Amul dahi  is priced at Rs. 35/- for 400 gms. So the price range that a buyer will have in his mind will be somwhere in between 30 and 40. 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

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.

Pricing for Amul Dahi

At the time Amul was formed, consumers had limited purchasing power, and modest consumption levels of milk and other dairy products. Thus Amul 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 dairy product segments from firms such as Hindustan Lever, Nestle and Britannia, GCMMF ensured that the product mix and the sequence in which Amul introduces its products is consistent with the core philosophy of providing butter at a basic, affordable price to appeal the common masses. This helped AMUL DAHI to create its brand image in the household sector of the society.

400gm

• Cup - Rs. 29.00

• Pouch - Rs. 16.00

200gm

• Cup - Rs. 15.00

• Pouch - Rs. 09.00