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Introduction:
Pricing, is one the contributor in analyzing the success of the company‟s marketing strategy.
Also, the most important element of the marketing mix which generates a turnover for the
organization. The other 3 elements are (Product, Place & Promotion) are the variable cost for the
organization.
Price must support the other elements of the marketing mix. Pricing is difficult and must reflect
supply and demand relationship. Too high or too low pricing could mean lost sales for the
organisation.
Pricing Factors:
The following factors to be considered by MRF before confirming on the Pricing Strategy to
be used:
Fixed and variable costs
Competition
Government regulations and policies
Company objectives
Proposed positioning strategies
Indian Army requires to buy about 50,000 tyres for periodic replacement in its trucks,
as and when required in year 2019-20:
The above situation shows the periodic requirement from the client, Indian Army. This could
be a great opportunity knocking for the brand MRF to increase the value proposition of their
product in the minds of potential buyers.
The pricing strategy to be used by MRF would be - Promotional Pricing - Special Event
Pricing
This would be undertaken by the brand to provide additional price benefit. As the
Promotional Pricing is a sales promotion technique, the firm will reduces the price of a
product, but for a short period of time to attract customers & increase the sales volume. This
is widely used both by manufacturers to gain market share & attract the customers to product
or a brand. Promotional pricing will help MRF for the primary benefit of driving more
revenue and cash flow in the short term. A promotional pricing strategy also carries strong
psychological weight in the value-oriented market. Placing a red sales tag on a product
causes a good proportion of customers to perceive that it is cheaper than they could buy
elsewhere – and that it is definitely less than the original asking price.
A promotional pricing tactic can be used to retain customer loyalty – to reward loyal
customers and to encourage their future purchases.
Ashok Leyland needs 5000 tyres, customized for its export order trucks for sub-zero
cold conditions:
There is a specific/customized requirement in this situation where the client demands for a
particular type of product that can bear the extreme climatic condition like sub-zero cold
conditions. A special production requirement should be considered before finalizing on the
pricing strategy for this lot. The customized product will have the same usage however, it
would require and additional manufacturing cost involved as the products would be way
superior to the regular truck tyres sold by MRF.
The pricing strategy to be chosen for them by MRF would be Product line pricing.
Product line pricing refers to the practice of reviewing and setting prices for multiple
products that a company offers in coordination with one another. Rather than looking at each
product separately and setting its price, this aims to maximize the sales of different products
by creating more complementary (which is the client requirement in this situation), rather
than competitive, products.
Some consumers want the best product available and are willing to pay more for it, while
other shoppers just want a basic product and buy primarily based on affordability. Creating a
product line that offers low-end, mid-range and high-end product and pricing can lead client
to believe that different products have different values. The brand will have to offer more
features on its top-end product to justify a higher price if all of the products are sold under
the same name and in the same place. Product line pricing is more effective when there are
ample price gaps between each category so that the consumer is well informed of the quality
differentials.
Golden Transport Company urgently needs 200 truck-tyres for its transport fleet:
There is a situation where the client, Golden Transport Company has an urgent need of fixed
number of 200 truck tyres. MRF need to adapt a pricing where the pricing adjustments can be
made by them as per the situation.
The pricing strategy to be chosen for them by MRF should be Differential Pricing.
As there is a fix sale MRF can give discount coupon that the client can use in the next bundle
of purchase. This would help MRF in expanding the customer base.
It will also help to build relation and earn customer loyalty as they would pay lesser than the
other customers for the same product in future.
Differential pricing is the strategy of selling the same product to different customers
at different prices. This strategy will enable MRF to profit from their customers' unique
valuations by offering different customers different prices for the same product. Offering this
spectrum of prices enables cinemas to maximize profits by serving customers with a variety
of different valuations. The range of prices created by differential pricing contributes to the
pricing windfall with larger margins from higher prices and growth by using discounts to sell
to more customers.
Conclusion:
Determining the pricing strategy will assist when it comes time to actually pricing the
products. As with the pricing objectives, numerous pricing strategies are available from
which to choose. Certain strategies work well with certain objectives, so making sure to have
taken time selecting an objective. Careful selection of a pricing objective should lead you to
the appropriate strategies. If the pricing strategy chosen seems to contradict chosen pricing
objective, then the brand should revisit the questions posed in the introduction and your
marketing plan.
Question - 2 - Answer:
Introduction:
Manufacturers have the ultimate interest to bring their production to the market and most
manufacturers would be involved in the process as intermediaries. The distribution channels
do not just affect the price, they influence other marketing decisions. A distribution decision
could give the product a unique position in the market. The decision will also be influenced
by how knowledgeable, how motivated, how available their partners would be to build a
customer relationship and to recommend their product.
VOLTAS:
The well-known brand Voltas has to decide on the distribution network for their B2B
category. Their customers consist of Hotels, Commercial Kitchens, Restaurants etc. The
basic price of the products sold by the starts with 5Lacs
Model Flow:
The three sales channels for the brand are Manufacturer‟s Representatives, Distributors and E
Commerce platform
B. Distributors:
Distributors traditionally buy products from manufacturers and resell them to dealers /
installing contractors (mechanical, electrical, plumbing), builders and institutional facilities.
They carry inventory of equipment, parts and accessories, and they are able to talk the
language of their dealers and customers. In addition, distributors employ territory managers
who call on dealers to promote all their offerings. Distributors buy in large annual quantities
to reduce cost and shorten lead times for their customers.
C. E-Commerce:
This helps with the following -
Increased customer loyalty – A convenient, user-friendly wholesale marketplace online will
help you retain your customers and form long-term relationships with them.
Revenue growth – Consumers are ready to pay more in exchange for a smooth shopping
experience, which is something that can be achieved with multichannel ecommerce solutions.
Expanded sales geography – With a sales channel strategy that involves online stores,
marketer can ship your products worldwide without a need to open physical stores abroad.
Focus on target markets – Selling through multiple sales channels gives the merchants more
information about their customers and lets them make use of that information to increase
sales.
Elimination of risks – Having several sales channels reduces the risks that can cost merchants
big time. Besides, having a physical store in addition to an online store will enable your
customers to see the products “in real life” before they buy them.
Saved time – Having a centralized e-commerce wholesale system where anyone can see all
necessary information at any time reduces the chances of errors and improves
communication between teams, thus increasing the efficiency of the entire sales process.
Communication tools that Voltas can use for promoting New Air Conditioners
1. Sales Promotion:
Trade shows, seminars, webinars: These tools can address many issues, but usually their
primary objectives are leads and a product/service introduction or announcement. An
example might be “Visit our booth #1234 and see the range of commercial refrigerators”.
Two of the biggest mistakes are not getting the leads out to the field in a timely manner and
having a very strong message that is easy to understand.
The results for direct marketing can easily be measured, unlike most communication
marketing tools. For example, a company can key the order form in a direct mail package
sent to customers by adding a certain code number. That way a company can calculate its
return on investment, or total revenue minus expenses, for each mailing.
3. Personal Selling:
Personal selling is another highly pervasive communication marketing tool. Companies have
both inside and outside sales reps to market their products to consumers and businesses. One
advantage of personal selling is that it offers two-way communication. The customer can ask
questions about a company products or service, and then make his decision to buy. However,
sometimes it can take multiple contacts to make a sale, especially for higher-priced items.
2. Digital Media - Technology – Treat technology and technological advances as your ally
and you could seriously improve your marketing communications. From developing product
Apps that your sales people can use as demonstration tools to mobile websites, dealership
sites, improved direct mail logistics and 3d printing, new technologies allow you to easily
and effectively target and connect with potential customers and improve your „pulling
power‟.
Conclusion:
The decision about your distribution channel will affect pricing, products, relationships with
intermediaries and your customers. Choosing between indirect and direct distribution
ultimately relies on the wants and needs of the target consumer. As a whole, people currently
favor online shopping over retail shopping. However, specialty items or luxury brands
generally require a more interactive experience with hands-on assistance. On the other hand,
online shopping allows for increased transparency, which is a huge factor for consumers
looking to compare reviews or search for the lowest price.
Question: 3 - a -Answer:
Introduction:
Current Scenario:
CoffeeBeans wants to spread their feather in one of the biggest opportunist suburbs of Delhi
which comes in the northern zone. The product – CoffeeCup is designed by them is very well
suitable for all the corporates spreaded across the zone. However, the company has set their
target to start with Hero Motors. Today customers are looking for varieties everywhere and in
everything. The product does not only provide varieties but also capable of serving coffee at the
fast pace. The product is fulfilling these requirements and ready to be pushed in the market.
a. Identifying individuals in the Hero’s Buying Centre for the different roles:
Considering the current scenario and the product to be offered, the management needs to have a
team in place in order to make the overall initiative successful for the brand. The product would
not only require the pitch to sell but also need to have a backup for the after sale service as and
when required by the Hero team. The product needs to be delivered and served in such a way
that customers talk about it amongst their peer group. It should be eye catchy and easily
accessible for everyone who needs quick refreshment. There should be a proper survey done as
to know the expectations of the target group and what exactly would make them happy with the
product.
Mr. Vivek Lal needs to have the following team in place to push their product
1 Marketing Manager
To plan the overall flow of Organising – Pitching – Delivering - Servicing
1 Sales Manager & 1 Sales Assistant
The sales team would be for chasing the client and to finally convince them to buy the
product and use it for the organisation
1 Operation Person
To handle the orders from start to end
1 Technical Expert
To demonstrate and be of service when the team an issue with the product
b. Expectations & Strategy for each Role:
The product manager Mr. Vivek, has responsibly defining why, when, and what of the product
that the engineering team built. This means they lead cross-functional teams from a product's
conception all the way through to its launch. He is the one who have set a product vision and
strategy to push it in the marketing by defining the role of each and every individual one by one
throughout the flow.
The entire team is expected to KNOW the product well before SELLING it.
Operations Manager:
They are the one who give the clear picture to the organization regarding the product‟s
feasibility. Their responsibility would be to check the best placement of the product. They need
to consider the elements like accessibility, visibility & frequency of customers visiting the place
for frequent refreshment. He would be able to determine needs within the company and connect
groups to work together to solve problems as and when they arise. They need to be critical
thinkers who can analyze situations and make decisions geared toward the company's best
interests.
Technical Expert:
A technical expert is the one, who has the relevant depth of knowledge and the ability to solve
problems and facilitate deep-dive discussions. They know the products and services inside and
out, and can apply the right ones to the right situations. If the management has any doubt
regarding the technology that is being used in the product, he would be the one having a clear
answer to the same.
Conclusion:
Every role defined above are together responsible for the product success story in the
organisation. Each of their responsibility would be occurring either today or tomorrow and
would result positively if fulfilled to the best of their knowledge.