Pricing Decisions

Price is the one element of marketing mix that produces revenue while the other produces cost (Kotler). Revenue not only drives the company’s profit margin but also decides how well a product will be accepted by the customers leading to its stay in the market. When deciding a product price, a company needs to remember

·         The past, present and current market scenario

·         Competition

·         Customer

·         Company’s own status quo (positioning, value proposition, target segmentation)

Product Pricing

Selecting the pricing objective:

The main objective of pricing is to acquire maximum market share. Parachute is sensitive in its pricing strategy and is not that expensive in order to stimulate its market growth. According to 2012 survey, Parachute has a market share of 53% and is the brand leader and the first brand in that particular segment.

Determining Demand:

The Indian customers prefer small frequent purchases. Parachute hair oil is available in different sizes thereby providing all the options to its customers. Parachute faces tremendous competition from Vatika, Bajaj, Dabur, etc,  but it still remains  the leader. It targets the rural and the urban population both. The price Catalog of Parachute Hair Oil is as follows.

Normal 200ml- Rs39, 20ml- Rs5; mini pack- Re1; Parachute Therapy 50ml- Rs190 Parachute Advanced 80ml- Rs27, 170ml- Rs48, 300ml- Rs80. Customers are loyal to this product and purchase this in spite of small changes in prices.

The price of the oil also differs in various distribution channels:

For Example:

Product	Parachute advanced tender coconut hair oil (200ml)
MRP	Rs85/-
Kirana store/Medicos	Rs85/-
Easy day	Rs84/-
Big  Bazaar	Rs83/-
Whole seller would probably sell at even cheaper price

The difference in price is very minute through the different distribution channels but has no effect on consumer’s choice preference.

Estimating Costs:

The cost of the oil is mainly influenced by its raw materials, packaging and ingredient oil prices. The cost is different for different variants as the key ingredients and packaging differs from product to product.

Analyzing Competitors Cost, Pricing and Offers:

The brand Parachute enjoys tremendous amounts of brand loyalty from its customers. Competitor’s presence has never really affected Parachute but it is crucial for it to strategize on its pricing at par with the competitors to attract new customers and hence needs to subtract the cost of additional features.

Selecting a Pricing Method:

Parachute aims at pricing its products so as to suit the requirements of both rural and urban areas. It aims at being non expensive but also feasible and appropriate at the same time.

Selecting the Final Price:

The final price is selected keeping in mind the various additional factors including the impact of other marketing activities, company pricing policies, gain and risk sharing pricing and the impact of price on other parties.