Price

Pricing

Pricing is the process of formulating a monetary value for the product in terms of what the company aims to receive in return for the entrepreneurial and financial investment put into its operations.

Pricing  is the thin line that connects the demand and supply factors at play in the market. Both these forces approach one another and interact through changes in the pricing mechanisms and policies.

Consumer Buying Psychology:

Reference Prices:  Consumers have a fairly good idea of the price range for a product, but rarely do they recollect the exact price. When examining a product, consumers often employ Reference Prices, where they compare the observed price to an internal reference price(reference in these terms is made to other products of a similar nature in that specific industry).

For example: Maggi Pazzta is priced at Rs. 23 and Sunfeast Pasta at 18. Other ready to eat noodles like yipee is priced at Rs 20, Ching’s noodles is priced at Rs. 15. So the consumer has a fair idea that to buy such products he may have to shred around 20 bucks.

Price- Quality inferences: Many consumers employ price as an indicator to form perceptions about the quality of a product. Some brands adopt exclusivity and scarcity to signify uniqueness and justify premium pricing. For ex: luxury products, jewellery, high segment automobiles, premium watches etc.

In ready to eat food category, this factor does not play an important role and the choice of product depends entirely on consumers likes and dislikes.

Price endings: Many sellers believe that prices should end in an odd number because for example: many customers see an amplifier priced 2999/- in the range of 2000/- rather than rounding it off to 3000/-

Prices ending in 5 or 0 are easier for the customer to process and retrieve from memory but the technique of manipulating these figures in terms of price endings is in line with the idea of reference prices. A consumer would not find it inconvenient to deal with price listings that end in odd number because he would generally be able to keep the range in mind while deciding between alternatives during the buying decision process.

Maggi Pazzta has distinguishably priced itself at Rs. 23 which a consumer may not forget easily because of its uniqueness to have an odd digit in the end.