Published on: Mar 4, 2016
Transcripts - Pricing (2)
PricingPricing is an important function in Marketing. It is about setting the right price to a product. Pricing isthe process of determining what a company will receive in exchange for its products. Pricing factorsare manufacturing cost, market place, competition, market condition, and quality of product.Consumer psychology and pricingPizza hut uses price cues. It prices its products in an odd number. Example :Beverages like Cold coffee ispriced at rupees 89, mango delight is priced at 69 .Appetizers like chicken skewers are priced at 99 .Thisis method as it conveys a notion of a discount or bargain .And also , as consumers tend to process pricesin a left –to – right manner rather than by rounding.Setting priceThe price of the products of pizza hut is set in following steps:Step 1: Price ObjectiveThe main pricing objective adopted by pizza hut is maximum market share. They set a price thatmaximizes the market share that they hold. They practice the market – penetration pricing. It aims atthe product – quality leadership .It aims to be the product – quality leader in the market.Step 2: Demand DeterminationPizza hut tries to charge a higher price compared to its competitors and still get the business .Theyconvinces the customers that they offer the total cost of ownership. They prefer customers who arefewer prices sensitive.Step 3: Cost EstimationThe costs involved in pizza hut are the variable costs and the fixed costs. The average cost isdetermined .And the pricing of the products are based on the price that covers the costs at the givenlevel of production.Step 4: Competitor’s costs, prices and offers analyzedThe competitor’s prices that are pricing by dominos, papa johns, u.s pizza etc are compared for differentproducts before the pricing is done. It is also made sure that the price objectives of the pizza hut aremet.Step 5: Selection of Pricing MethodThe pricing method that is followed by pizza hut is the mark up pricing. In this method, standard markup price is added to the product’s cost.
Step 6: Final PricePizza hut is able to high pricing. Pizza hut has a relative high quality and high relative advertising, whichenables it to go for high pricing compared to its competitors.Adapting the PriceGeographical PricingGeographical pricing is when the company prices different prices to different prices to its differentcustomers in different customers in different locations. Pizza hut International prices differentlycompared to pizza hut India. The pricing varies in different countries. Example: A pan size pizza is pricedis 3$ to 5 $, whereas in India it is 120 rupees.Promotional PricingPizza hut adopts the special- event pricing and the psychological pricing. The special – event pricing isusd especially adopted in festive times. Example: Pizza hut launched 15 new Indian varieties on its 15 thyear in India, and special pricing on diwali festival etc. And psychological pricing is the ending the pricewith an odd number, as explained earlier.