Summary

Chapter 7: Pricing Strategy in Rural Market

1. Objectives:
The key learning objectives is to –
 Gain an understanding of the factors that impact pricing in the rural market
 Understand the key pricing objectives of the rural market
 Understand the pricing policies adopted by the rural marketer
 Understand the key challenges involved in price determination
 Gain an insight into innovation in pricing adopted by number of companies.

2. Background to Pricing Strategy in the Rural Markets:

 The value perceived by the customer in comparison to the price point
 Price as function of product or services or both product and services
 Inclusion of costs of warranties, guarantees, delivery, installation costs in the
pricing decisions
 Buyers expectation and the budgetary constraint
 Discounts to be offered in the market
 Profit margin and target of the marketer
 Prices of comparable products / alternate products
 Commissions for the distributors and dealers
 Brand premium
 Cost of after sales service where applicable
 Replacement costs
 Credit period
 Logistics and delivery costs to the point of retailer, customer
 Sales promotion expenses and recovery
 Availability of Government subsidies
 Return privileges if any
 Demand and supply scenario of the product in the market
 Sales volume current and the target of the marketer
 Image of the product in the market

3. Pricing Objectives of the Marketer:

 Growth in sales
 Market Share increase or maintain
 Profit level
 Meet, Exceed or Follow competition

Prepared by: VarshaGodbole Chapter 7 Page 1

 Summary

4. Linkage of Pricing Policy with Other Variables:

 Perception of the product and such similar products in the market
 Can price be considered as an indicators of quality
 Does the product has an concealed values and benefits
 Buyer’s emotions, preferences and habits that impact the pricing
 Charm pricing principles
 Understand of the psychological framework of the consumer
 Availability of market information to consumers
 Bargaining power of the consumer. This is factor of demand and supply in the
market
 Pricing strategy need not be cost plus margin, but need to evaluate the
consumer side of the business.

5. Price Determination::
 Segmentation of Market
 Demand estimation
 Share in the Market
 Marketing mix
 Costs estimates

6. Pricing Policies:
 Current Price
 Pricing above the current or market price
 Pricing below the line
 Competition without Price issues
 Premium pricing
 Lower pricing
 Penetration pricing
 One Price / Fixed Price
 Variable / Negotiated Pricing policy
 Cost Plus or Mark up

7. Importance of Discounts in Rural Marketing:

 Trade Discount
 Cash Discount
 Quality Discount
 Seasonal Discount

Prepared by: VarshaGodbole Chapter 7Page 2

 Summary

8. Dealing with Challenges in Pricing:

 Considering the saturation levels for many of the products in the urban market,
companies across sectors are targeting the rural consumer. However, the rural
market is very price sensitive and companies need to also aware of the rivals
which may pose a big threat to existing players.

Prepared by: VarshaGodbole Chapter 7Page 3