PRICING IN RURAL MARKETING

PRICING  in   Rural Marketing

 Among the 4 As of rural marketing-affordability, availability, awareness & acceptability-the major determinant of consumption is affordability. 

Affordability is, in turn, determined by two factors 

Incomes of consumers &

Prices of the products or services. 

As such, corporate enterprises are adopting a two-pronged approach of boosting incomes from rural markets through development marketing & by adopting pricing policies & methods that make products affordable. 

The significance of pricing as an element of the marketlng mix has increased with recent trends like market fragmentation and saturation, inter-category competition, de-branding & customization and value-conscious consumption. 

The future may witness more price wars than brand wars if marketers fail to learn new lessons of value-added marketing.

CONCEPT & SIGNIFICANCE

PRICING

The price represents the market value of a product or service. 

It can be expressed in monetary and non monetary terms. 

THE PRICE OF A PRODUCT IS SIGNIFICANT FOR THE FOLLOWING REASONS:

It indicates the market value of a product. It reconciles supply and demand forces and achieves equilibrium.

Price gives an image to a product. 

Generally high-priced goods are considered to be high-quality goods.

Price is a major tool of marketing in designing offers for consumers and a major force in competitive battles.

Prices of goods possessed and used by consumers help determine their status.

To sum up, price symbolizes quality, value, status and lifestyle for comparison among buyers. 

It provides signals by which potential buyers and sellers can rationally decide how to allocate their scarce

resources. 

Pricing policy is one of the integral components of the marketing-mix policy of an enterprise.

Price decisions are important for the following reasons:

To determine the level of demand the product can have

To generate sales, revenues and profits for the firm

To stay competitive in the market.

PRICING AND PRODUCT LIFECYCLE

Pricing decisions are influenced by the stages of the product lifecycle-introduction, growth, maturity and decline.

Introduction

In the introductory stage, a company has two options

Skimming pricing 

Penetration pricing

PRICING.

Skimming  Vs penetration pricing-

Many companies at the time of introduction favor setting high prices to skim the cream 

Skimming price is preferred when high price is aimed to communicate the image of a superior product. 

Overtime, the skim price is lowered successively in steps so that the product may slide down the demand curve to pick up other price segments. 

Technology products such as mobile phones and their services started off at higher prices. 

In course of time, market expansion as well as technological and managerial innovations has led to a fall in the prices. 

Penetration is chosen when market is highly price sensitive, and a low price stimulates market growth. 

The product introduced at lower prices may be upgraded to offer premium quality product versions to high-income segments. 

The up-gradation of Lifebuoy by HUL is a classic example of a product that penetrated rural market at a lower price. 

In course of time, it is upgraded and improved quality versions are offered to

  match the expectations of rural consumers.

marketers make mistakes in their choices. 

 Many durables like mobile handsets and services, air coolers, vacuum cleaners & TVs started with high prices and penetrated the market with lower prices. 

Products like Maggi Noodles, Vicks

  Vaporub & Rin detergent penetrated  markets with introductory lower prices and  later went up the price ladder.

Growth

Prices are mostly maintained at the same level. 

Changes may be initiated depending upon

   the competition and consumer response.

Attracted by opportunities, competitors may enter the market.

To mitigate competition, low-priced product marketers may consider introducing high-priced models to attract the premium segment while high-priced product marketers may launch low priced varieties.

Maturity

Price (brand) wars commence during the stage. 

Competitors will launch offensive attacks on the pioneer

and the pioneer tries to retaliate and build markets by innovations and price-related promotions.

One must be careful in employing sales promo tools that reduce prices. 

Such measures may hurt the quality image of the product.

Decline

When sales show continuous decline, marketers have two options: 

(i) reengineering the brand as HUL

      did to Lifebuoy or 

(ii) terminating it by reducing prices and clearing the stocks.

PRICING STRATEGY_THE AFFORDABILITY CHALLENGE

Affordability is the most imp. concern in rural markets. 

Rural consumers have low incomes &

an orientation for simple living guided by the principles of economy and saving.

The challenge to rural marketers can be understood by the distribution of rural people by income categories.  

It is evident that the middle-and low-income categories are large and

they are either value conscious or price conscious.  

The challenge to rural marketers is to provide market offers that consist of products that are reasonably good in quality and low in price. 

The challenge involves balancing the two important goals of modern corporate enterprises-profit and corporate social responsibility.

Another important finding is that rural consumers are basically against credit purchases

Mayank Pareek, executive offrcer, marketing and sales, Maruti Suzuki, observed that in contrast to the urban market where 80 % of the vehicle's cost is financed, rural consumers pay cash for up to 60% of the price tag.