Pricing

Pricing is a vital component of the marketing mix that determines revenues. It is essentially the process of determining the factors driving value perceptions in exchange for its products or services.                                           

                                      

The following steps are generally taken into consideration while determining the price:-

Step 1: Selecting the price objective

In this phase the company decides where it wants to position its product in the market. The 5 key pricing objectives are survival, maximum current profit, maximum market share, maximum market skimming and product-quality leadership.

As Relispray enjoys a fair market share since 20 years, survival and product-quality leadership are important.

Step 2: Determining Demand

After careful analysis of price sensitivity and elasticity, estimation of demand curves through surveys, price experiments and statistical analysis, a consensus is reached regarding the level of demand that can be expected from the market.

Pain relievers being a perfectly inelastic good, the change in price of the overall category does not impact the demand as the need for the product is inevitable.

Step 3: Estimating Costs

To set a price that covers all costs and overheads and manages to yield a profit, the company needs to figure out how the pricing would vary with varying levels of production. Factory costs, Advertising costs and distribution costs are the primary drivers when estimating costs.

Factory Costs – Relispray has an edge over the competitors when it comes to factory costs as all the production processes including manufacturing and packaging are in-house.

Advertising Costs – The strong and trusted brand image of Relispray helps in minimizing advertising costs as the sole purpose of advertising currently is to retain brand recall.

Distribution Costs – The current distribution expenditure is enough to help Relispray have a strong distribution base in the west and north. However, maximizing reach in the south and east is required to drive larger volume.

Step 4: Analyzing Competitor Costs, Prices and Offers

The introduction or change in price of an existing product will always provoke a response from customers, competitors, distributors, suppliers and even the government. It is essential for the company to anticipate and predict these responses and set price accordingly. Pricing parity is important while catering to a broad category and Relispray has a similar pricing strategy. MRP’s of Competitor Brands:

Step 5: Selecting a Pricing Method

This step is one of the most crucial phases in the pricing process. Whether to go for elementary markup pricing, target-return pricing, perceived value pricing, value pricing, going-rate pricing or auction-rate pricing plays a huge role in shaping the product’s future in the market.

Relispray’s pricing decisions involve a target-return pricing approach considering the price parity and the category buying behavior.

Step 6: Selecting the Final Price

The final price must take into account the brand’s quality and advertising relative to the competition since these are key factors that influence consumer buying behavior.  Also, the reaction of suppliers and distributors to the set price needs to be taken into account and some level of gain and risk sharing pricing policy needs to be in place so that the perceived level of risk is low. Finally, the price must always be consistent with the company’s pricing policies and under no circumstances should alienate customers.

Relispray SKU options and price: