Presentation On

Pricing Decision In Service Marketing Presented to: Prof. Seema Ladda

Presented By: Ashish Mishra A-40 Khushboo Kesari A-30

What is service?
Service is a set of one time consumable and perishable benefits Core Services: A service that is the primary purpose of the transaction. E.g.: a haircut or the services of lawyer or teacher.

Supplementary Services: Services that are rendered as a corollary to the sale of a tangible product. Eg: Home delivery options offered by restaurants above a minimum bill value

Characteristics of Services
Intangibility Perishability Inseparability Non ownership Variability

What is service Marketing?

Services marketing typically refers to both business to consumer (B2C) and business to business (B2B) services, and includes marketing of services like telecommunications services, financial services, all types of hospitality services, car rental services, air travel, health care services and professional service

7P`s of Service Marketing

Product

Pricing
Place Promotion People Process Physical Evidence

Pricing Decision In Service Marketing

What is pricing decision

Decisions faced by top management and marketing managers. How much to charge for a product or service depends on a multitude of factors such as competition, cost, advertising, and sales promotion. Economic theory suggests that the best price for a product or service is the one that maximizes the difference between total revenue and total costs. However, in reality, the price charged is usually some form of cost-plus, which is later adjusted for market conditions and competition.

Pricing and Business

How companies price a product or service ultimately depends on the demand and supply for it Three influences on demand and supply:
1. 2. 3. Customers Competitors Costs

Influences on Demand and Supply

Customers influence price through their effect on the demand for a product or service, based on factors such as quality and product features Competitors influence price through their pricing schemes, product features, and production volume Costs influence prices because they affect supply (the lower the cost, the greater the quantity a firm is willing to supply)

Service Pricing
Pricing is the mechanism by which sales are transformed into revenue
Why pricing of Service is critical?

1) Customers knowledge of service with respect to reference price. 2) Pricing of service is unique. 3) Providers may face difficulty in estimate price in advance. 4) Individual customer needs are different. So comparison of price become difficult.

Objectives and Approaches in Pricing a Service.

Pricing Objectives:
1) Survival 2) Profit or revenue maximization 3) Prestige

Approaches in pricing Services

1) Cost based 2) Demand based 3) Competition based

Factors Considered When Pricing a Service

1) Role of non monetary cost a) Time cost b) Search cost c) Convenience cost d) Psychological cost 2) Competition 3) Urgency 4) Economic Value in use 5) Market research

Pricing Tripord
Pricing Strategy = Cost+ Competition+ Value to customer The cost that a service provider needs to recover is through imposing a minimum price or floor price for a specific service offered. Which has to match with Customers perceived value of the offering which sets a ceiling on the price. Price = Direct Cost+ Overhead cost+ Profit Margin.

4 Meaning of Perceived Value

1 Pricing strategies when customer means value is low price. eg: Discounting, Penetrating pricing. 2 Pricing strategies when customer means value is every thing. eg: Prestige pricing, skimming pricing.

3 Pricing strategies when customer means value is the quality one get from the price. eg: Value price, market segmentation pricing. 4 Pricing strategies when customer means value is all that one get for all that one give. eg: Result based pricing