IND PRICing

8/9/2019 IND PRICing

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INDUSTRIAL PRICING & LEGALCONCEPT


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Price of a )artic#lar )rod#ct isdecided + taki"$ i"to acco#"t

other )rod#cts that are s#+stit#tesor co,)le,e"ts sold + theco,)a"

Price is ,ore (e-i+le decisio" area

.cha"$i"$ /#a"tit of $oods)rovided + the seller! cha"$i"$)re,i#,s a"d disco#"ts that are

o*ered! cha"$i"$ the ti,e a"d


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PRICING 1ETODS3

APPROACES3POLICIES

• Cost +ased )rici"$ .LIST PRICE4

• 1arket Orie"ted Prici"$ 5TRADE DISCOUNT 36UANTIT7 4

• 8olloi"$ Co,)etitors

• Ne$otiated )rici"$

•

C#sto,er deter,i"ed )rici"$• 9reak%eve" )rice

• 1ar$i"al Cost )rici"$

• Creative )rici"$


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:

8actors I"(#e"ci"$ Prici"$Decisio"

• Internal factors'

– Prici"$ o+;ectives – Cost A"alsis

– Prici"$ )olicies

•

External factor s' – Co,)etitive a"alsis

– De,a"d a"alsis

–

Gover",e"t re$#latio"s


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Prici"$ o+;ectives

• 1arket Ski,,i"$

• 1arket Pe"etratio"

• Prod#ct Di*ere"tiatio"

•

Achieve Tar$eted ROI

'

• S#))ort Cor)orateI,a$e

• Disco#ra$e

Co,)etitor E"tr• 1ai"tai" a"d

I,)rove 1arket

Share• 1eeti"$

Co,)etitio"


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1arket Ski,,i"$

•Nel i"trod#ced )rod#ct,a-i,i


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Prici"$ O+;ectives .co"t?0

• Earl Cash Recover –

8ir, faci"$ li/#idit )ro+le, illado)t ,ea"s to recover cash

•

Dis)osal of s#r)l#s – 8or, of d#,)i"$


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Prici"$ O+;ectives .co"t?0

• O)ti,#, Ca)acit Utili


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De,a"d Co"ditio"s

• De,a"d is a derived de,a"d

•

I"d#strial +#ers co"sider factors like/#alit! service a"d deliver


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De,a"d deter,i"a"ts

• Assess the val#e )rovided to c#sto,ers

>al#e de)e"ds o" the attri+#tes of the)rod#ct o*eri"$

Eval#ate the relative i,)orta"ce of theattri+#tes to each ,arket se$,e"t

Price diferentials vis‑a‑viscompetitors can be determined bycomparing the total value buyersassociate with attributes provided

by each competitor


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De,a"d deter,i"a"ts

Costbene!t strategyimplications

• Pro,otio" #sed to ali$"c#sto,er )erce)tio"s of val#eith act#al )rod#ct)erfor,a"ce

• Use )ro,otio" to cha"$e

c#sto,er val#e )erce)tio"s for


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1ethods of esti,ati"$

de,a"d .e-)ectatio"s0• Test ,arketi"$

S#ita+le if the )rod#ct is sold to a lar$e

"#,+er of #sers a"d short #sa$eccles

S#rves

1a"a$erial ;#d$,e"t


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Co,)etitio"

• 1o"o)ol

• Pate"t )rod#cts

• Oli$o)ol


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8actors related to co,)etitio"

.co"t''0• Prod#ct t)e

–"echnical and speciali#ed

"o )rice co,)etitio" –Sole )rod#cts cost is

a))ortio"ed – Boi"t )rod#cts de,a"d for ;oi"t )rod#ct ca" a*ect the

rici" '


19/50

8actors related to co,)etitio"

.co"t''0• Price leadership

8ir, that sets the )rice for a )artic#lar

)rod#ct is called as a )rice leader' e$ Steel! Oil! Ce,e"t i"d#stries'

• Product Dierentiation –

If the )rod#ct of the co,)a" is stro"$ a"d#"i/#e it ill +e a+le to ,a"i)#late the )rice


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1arket Characteristics

• De,a"d Tre"ds

• I,)orta"ce of )rod#ct to +#si"ess+#ers

• Trade characteristics


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E-cha"$e Rate

• 8ir,s hich have i"ter"atio"al

+#si"ess• Price of i,)orted )rod#cts is

a*ected

•

Do,estic )rice is also a*ected


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I,a$e of =r,

• i$her re)#ted =r,s ca" easil

i"crease )rice• I,a$e of the co#"tr a*ects the

)rici"$ freedo,

•

Poor /#alit i,a$e is a hi"dra"ceto +etter )rice


23/50

Gover",e"t factors

E-)ort )rici"$ is i"(#e"ced +

Gover",e"t Policies & Re$#latio"s• Re$#latio" of 1ar$i"s

• Price 8loors a"d Ceili"$

• S#+sidies• Ta- Co"cessio"s a"d E-e,)tio"s

.D#t dra +ack sche,e0


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Gover",e"t factors .Gover",e"t

Policies & Re$#latio"s0 co"t?

• I"ce"tives

• Gover",e"t Co,)etitio"• Ta-es .c#sto,s d#ties! sales ta-!

e-cise d#ties0

• I"ter"atio"al A$ree,e"t


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Cost ecie"c of =r,

• Cost ecie"c of =r, ho

favora+le is the =-ed cost a"dvaria+le cost as co,)ared to theco,)etitors


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Costs

• Prici"$ decisio" is i"(#e"ced +

the costs of )rod#ctio" .=-ed a"dvaria+le0

• Cost (e-i+ilit e-te"d o" its cost

ecie"chich is ho favora+le is the

=-ed a"d varia+le costs co,)ared

to the co,)etitors'


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COST IN INDUSTRIALPRICING• Cost and Supply

conditions gives

minimum price the sellershould get

• Demand andcompetitive conditions

determine the maximum


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T)es of costs i" I"d#strial 1arketi"$

• Prod#ctio" cost

• Selli"$ a"d Deliver cost


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Prod#ctio" cost

• 8i-ed costs

• >aria+le costs


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E-)erie"ce3 Lear"i"$C#rve

• >aria+le or vol#,e%de)e"de"t cost

decli"e + )redicta+le a"dco"sta"t )erce"ta$e each ti,ec#,#lative vol#,e is do#+led'

•

>ol#,e de)e"ded )he"o,e"a• Prod#ctio" cost red#ces ith

e-)erie"ce'


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C titi 9iddi Th


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Co,)etitive 9iddi"$ !The+#ers side

1ost $over",e"t +#i"$ do"e ++iddi"$

• Closed bidding• ' 8or,al )rocess! +ids o)e"ed a"d

revieed at a )rescri+ed ti,e

• 2' Lo +idder "ot alas selected

• $pen bidding• ' I"for,al! i"volves "e$otiatio"s

• 2' Used he" s)eci=c re/#ire,e"ts are

hard to de="e

P i i d t


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Prici"$ "e )rod#ctsSki,,i"$ vs' Pe"etratio"

• Skimming• ' Reach se$,e"ts i,)ervio#s to

high initial• )rices• 2' Ca)t#re earl )ro=ts

• F' Red#ce )rice as co,)etitio" e"ters

• Penetration• ' Used he" de,a"d is elastic! stro"$

threat of

• co,)etitio"! a"d o))ort#"ities for costred#ctio"s


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M t it t i i


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Maturity stage pricingstrategy

The co,)etitors are ell e"tre"ched.esta+lished so =r,l that cha"$e is dic#lt0a"d a$$ressive

To i"crease sales vol#,e the ,arketer has toc#t i" to co,)etitors ,arket share

This ca" +e achieved + lowering the priceto match the competitors' price

9esides i"d#strial +#er ill take f#lladva"ta$e of the cost%+e"e=t a"alsis ofvario#s s#))liers


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(ecline stage )consumer preerence*pricing strategy

Situation dependant

If the ,arketer has +#ilt a re)#tatio" of $ood)rod#ct /#alit a"d de)e"da+le service it need not

cut the )rice +#t red#ce costs to ear" so,e )ro=tsA"other strate$ is to cut the )rice to i"crease the

sales vol#,e a+ove +reak eve" a"d #se the )rod#ctto hel) sell other )rod#cts i" the )rod#ct ,i-

If so,e of the co,)etitors have ithdra" the

,arketer ca" co"sider selective increase i" )ricefor so,e se$,e"ts of the ,arket hich are "ot)rice se"sitive


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&eographical pricing

The la"ded cost to the co"s#,er ca" varas )er his locatio"

E-%factor The )rice )revaili"$ at thefactor $ate' 8rei$ht a"d tra"sit i"s#ra"ce

costs are to the +#ers acco#"t'8O9 8ree o" +oard 0 of ori$i" 20 of

desti"atio" .CI8 Cost! i"s#ra"ce! frei$ht0

Ta-es & Levies


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C i l t d


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Commercial terms andconditions+

Ear"est ,o"e de)osit .E1D0 1o"e to +ede)osited alo"$ ith o#r +id .Pro)osal0 tosho o#r serio#s"ess a"d ="a"cial

stre"$th to take #) the )ro;ect .Nor,allH of +id val#e' Sho#ld +e )ro,)tl take"+ack if +id is "ot acce)ted0


40/50

"erms o payment

Direct )a,e"t fro, the )art .creditorth c#sto,ers3Raila recei)t! lorrrecei)t0!

Pa,e"t thro#$h +a"k

Letter of credit LC at si$ht or FH3J: das

Doc#,e"ts.Raila recei)t0 a$ai"st)a,e"ts DP


41/50

9a"k $#ara"tees i"stead of E1D!)erfor,a"ce $#ara"tees! a$ai"st adva"ce

)a,e"ts to the "e s#))liers

8ir, )rices "o cha"$e

Price variatio" cla#se .P>C0%viole"t )ricevariatio" of ra ,aterial

Price r#li"$ at the ti,e of deliver .PRD0 1o"o)ol! viole"t cha"$es i" )rice sit#atio"s

De,#rra$e Char$es for stora$e +eo"dsti)#lated ti,e .+ air)ort 3 Raila

a#thorities! Road tra"s)ort $o%do"s0


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LD Pe"alt Li/#idated da,a$es 3 LateDeliver Pe"alt! Nor,all K )erce"t )ereek ith a ceili"$ of : of order val#e o"#"delivered )ortio"! ri$ht to ca"cel order at

risk )#rchaseRisk )#rchase cla#se If s#))lier fails to

s#))l! the +#er ca"cels the order! +#s,aterial fro, other s#))lier at the risk a"d

cost to the ori$i"al s#))lier 'i'e' ask hi, to)a di*ere"ce if "e )rice is hi$her .E1Dco#ld +e ad;#sted for the di*ere"ce0


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.ing!sher to wet lease / new 0irbus to 0ir%ndia1 2an 341 4556

Pilot shorta$e leads Air I"dia to seek et%leases

U"der et lease as o))osed to dr lease! a

carrier leases its aircraft to so,eo"e else alo"$ith its cre' hether the aircraft ill +e )ai"tedi" Air I"dias colors a"d the cre ill ear AirI"dia #"ifor,s is still #"clear'

Lessor Mi"$=sher o"s a"d o)erates theaircrafts

Lessee Air I"dia #ses aircrafts a"d )as leasere"tals to Lessor i'e' Mi"$=sher


45/50

Le$al co"ce)t


46/50

7ocus o business related legislation

,egal aspects o productco"s#,er )rotectio"

Pro,oti"$ health co,)etitio"

E"viro",e"t )rotectio"


47/50

Consumer protection

The ,a;or area of le$islatio" is#"fair trade )ractices + the

+#si"ess to )rotect the $#lli+leco"s#,ers fro, the#"scr#)#lo#s ,arketers

The le$islatio" ill havechecks o" the false a"d fakeadvertise,e"ts! dece)tive


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Promoting healthy competitionI

i" a free ,arket eco"o,! the co,)etitio"is the f#"da,e"tal stre"$th for achievi"$$roth

oever so,e =r,s! i" order to do,i"ate

the ,arket ,a ado)t the restrictive trade)ractices

The le$islatio" is ai,ed to c#r+ s#ch+#si"ess )ractice


50/50

8nvironmental protection

The le$islatio" is ai,ed at holdi"$ the+#si"ess res)o"si+le for the social cost iththe )rod#cts the ,a"#fact#re a"d the,a"#fact#ri"$ )rocess the ado)t'

E,issio" "or,s for ,otor vehicles a"d a#tof#el

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