The Pricing Agenda
Price is the key deciding factor in the customer's purchase process. This is why it is the second most important P in the four Ps of marketing.
There are six different types of pricing generally available to the marketer while setting prices in the product mix:
PRODUCT LINE PRICING:
Marico is one of those companies that have product line pricing. Every line of product/Brand is priced differently to suit different target customer segment.
For example, a Saffola Active will cost lesser than a Saffola Gold which costs lesser than a Saffola Tasty.
Even within the product line, there exist different price points for each SKU.
For Saffola Active, the pricing is as follows:
1 Ltr – 115-130 Rs
Marico is one of those companies that have product line pricing. Every line of product/Brand is priced differently to suit different target customer segment.
For example, a Saffola Active will cost lesser than a Saffola Gold which costs lesser than a Saffola Tasty.
Even within the product line, there exist different price points for each SKU.
For Saffola Active, the pricing is as follows:
1 Ltr – 115-130 Rs
5 Ltr – 580 Rs
The quality of the brand, the positioning along with product benefits, as well as the packaging should justify the pricing differences.
OPTIONAL FEATURE PRICING will not exist for Saffola Active as it is a FMCG good.
Optional Feature pricing is widely used in consumer durable segments, the automobile industry and the entertainment and hospitality/travel industry. They come with a base fare and upon that, on availing of an optional feature/benefit, the company charges extra price.
CAPTIVE PRODUCT PRICING is mostly followed in those products which are initially sold at a lower rate, but their additional and essential components are priced at a premium which has to be purchased by the customer since he would not be able to use the product without them. Examples of captive product pricing are: Printers (Cost of the cartridge), Razor blades (Cost of the blade is higher than the stick but the blade is an important part) and cameras (the lenses, stands and other necessary equipment cost much more than the camera itself).
TWO-PART PRICING is essentially a pricing where there is a fixed price as well as a variable price. Mobile operators use this commonly. The fixed fees is the price of the SIM card or registration fees and the variable usage fees is the amount of calls one makes, the data (2G/3G) used. Higher-end pubs and restaurants charge an admission/reservation fee and the usage cost is the quantity of food/drinks ordered.
BY-PRODUCT PRICING is done in those cases where the manufacture of one product causes manufacture of by-products and these are then priced according to their usability. For example, in a petroleum refinery, there are many by-products at different stages of the process (petrol, diesel, kerosene, naphtha etc). These are then priced according to their usage and demand.
PRODUCT-BUNDLING PRICING happens at most promotional schemes. You would have seen the deodorants/soaps/toothpastes bundled together and sold at a much reasonable price than if you would have purchased them separately. A bundled data package in a mobile plan is a monthly/annual scheme wherein one gets all benefits at a comparatively lower price than if these were purchased separately.
In the case of Saffola Active, the pricing can be as a Product Line pricing and/or the Product-Bundling.
The quality of the brand, the positioning along with product benefits, as well as the packaging should justify the pricing differences.
OPTIONAL FEATURE PRICING will not exist for Saffola Active as it is a FMCG good.
Optional Feature pricing is widely used in consumer durable segments, the automobile industry and the entertainment and hospitality/travel industry. They come with a base fare and upon that, on availing of an optional feature/benefit, the company charges extra price.
CAPTIVE PRODUCT PRICING is mostly followed in those products which are initially sold at a lower rate, but their additional and essential components are priced at a premium which has to be purchased by the customer since he would not be able to use the product without them. Examples of captive product pricing are: Printers (Cost of the cartridge), Razor blades (Cost of the blade is higher than the stick but the blade is an important part) and cameras (the lenses, stands and other necessary equipment cost much more than the camera itself).
TWO-PART PRICING is essentially a pricing where there is a fixed price as well as a variable price. Mobile operators use this commonly. The fixed fees is the price of the SIM card or registration fees and the variable usage fees is the amount of calls one makes, the data (2G/3G) used. Higher-end pubs and restaurants charge an admission/reservation fee and the usage cost is the quantity of food/drinks ordered.
BY-PRODUCT PRICING is done in those cases where the manufacture of one product causes manufacture of by-products and these are then priced according to their usability. For example, in a petroleum refinery, there are many by-products at different stages of the process (petrol, diesel, kerosene, naphtha etc). These are then priced according to their usage and demand.
PRODUCT-BUNDLING PRICING happens at most promotional schemes. You would have seen the deodorants/soaps/toothpastes bundled together and sold at a much reasonable price than if you would have purchased them separately. A bundled data package in a mobile plan is a monthly/annual scheme wherein one gets all benefits at a comparatively lower price than if these were purchased separately.
In the case of Saffola Active, the pricing can be as a Product Line pricing and/or the Product-Bundling.
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