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from the verb produce, from the Latin produce(re) '(to) lead or bring forth'. Since 1575, the word "product" has referred to anything produced.[3] Since 1695, the word has referred to "thing or things produced.
PRICING
Method adopted by a firm to set its selling price. It usually depends on the firm's average costs, and on the customers perceived value of the product in comparison to his or her perceived value of the competing products. Different pricing methods place varying degree of emphasis on selection, estimation, and evaluation of costs, comparative analysis, and market situation. See also pricing strategy.
PRODUCT LINE
A group of related products marketed by the same company. It is the marketing strategy of offering several related products for sale as individual units. Here several products are combined into one group, which is then offered for sale as a unit, product lining involves offering the products for sale separately. A line can comprise related products of various sizes, types, colors, qualities, or prices. Line depth refers to the number of subcategories of a category. Line consistency refers to how closely related the products that make up the line are.
What Is a Product Line Pricing Strategy? Pricing is one of the most important elements of the marketing mix and has the most effect on whether or not the strategy is successful. Product line pricing (PLP) is a pricing strategy used to sell different products in the same product range at different price points based on features or benefits.
ADVANTAGES
1.The Standard Distribution Model 2. Proprietary Product Lines and Brands Help a Distributor 3. Proprietary Product Lines Increase the Value of a Distribution Business 4.Detailed cost data relating to each product in product-line 5. Profitability and the contribution of each product
6. Product-wise plant capacity and the alternative uses to which it could be put in case a change in product-mix envisaged. 7. Product-wise demand present and potential
8. Prevailing market prices for similar products and the marketing strategies adopted to promote their sales.
2. Prices which are proportional to incremental costs They produce the same percentage contribution margin over incremental costs for all products. This method also suffers, although not to that extent, from the arbitrary allocation of common costs. Moreover , it also fails to take into account the conditions of demand and competition.
4. Price which produces contribution margin depending upon the elasticity of the demand of different market sector
Buyers of high incomes are usually less sensitive to price than those that make up the mass market, and it often profitable to put higher profits margins on product s for the plushy class markets than for the rough and tumble mass markets. 5. Prices that are systematically related to the stage of market and competitive development of individual members of the product line
1.PRICING PRODUCT DIFFER IN SIZE: This approach is based on the proposition that size is measure of value to the buyer. size can be measured by a variety of dimensions and it is important to find the most appropriate one. For some products , the choice is not difficult to make like advertisement in news paper. but on the other hand some products like shoes of branded companies in different size dont have much difference in the price.so it is useful to prepare in advance a systematic pattern of price in relation in each size.
3. CHARM PRICING
The belief has no longer been held that prices ending in odd figures e.g., Rs. 99 and Rs.1999 have greater effect than even prices such as Rs.100 and Rs.2000. although this point has been debated for years, empirical research does not yet permit to a conclusive answer, but the evidence does throw serious doubt on the validity of the charm theory. Example product of Bata
2 Types
Business-getting Price
to estimate what is the higher price that can be charged without losing the business is often a sheer guess. Under this the discouragement pricing involves which doesn't give any profit to sellers. Also include charging maximum price, whether or not this price is acceptable.
Acceptable Price:
The second problem is to determine the lowest price that the seller can afford to accept, considering his alternatives. A useful concept for this is parity price. Parity pricing is the one that yields the same total contribution -profit as would have been obtained from the available alternatives use of plant facilities( or of the bottle neck factor. E.g., skilled labour ). The pricing action of the firm should depend upon what these alternatives are.
EXAMPLES
This is a great example of product line pricing because it shows how Apple is going to have 6 different versions of the iPad and all will have different prices. The article states the range of the prices will be around $499 to $829. The article really emphasizes the differences in the costs to make the product between the $499 iPad and the $829 iPad. This is one component of product line pricing. It also mentions the customer perceptions of the iPad. Three of the versions will have 3G, which some customers may believe this will add value to the iPad. While, the other three do not have 3G. This is a great example of product line pricing because it includes the costs to make the versions, the different features included in each version, and how Apple is making several different versions of a similar product