PRICING STRATEGY

PRICING

Price is one of the most important elements of the marketing mix which helps generate revenue.
The selling price is fixed after the study of various data about the market, the demand and the offer. More precisely, the price which the firm chooses to impose depends on the cost of the product, on the positioning choice, on the evaluation of the competition or of the vision of quality and the value perceived by the price. The price gives an element of differentiation to the customer; moreover it influences its choice and the image which the consumer guesses of the product. Indeed “the price-setting must be set in relation with the value offered to the customer and perceived by them”. Besides the relationship exiting between the price and the customer, the price takes part in the decision of the volume of the sales, of the rate of the profit and its global volume.

Uncontrollable economic conditions could lead to fluctuations in petroleum prices, increasing overall production costs and dragging down profit margins.
70% of homemakers responded that VPJ is "economical". Each Jar price depends on its size. As HUL enjoy its monopolistic position in the petroleum jelly market and has fairly kept the price low targeting at every household. They used the Market penetration pricing for years.

There are certain steps that need to be incorporated by the firm for developing the pricing strategy for the product:

Select the pricing objectives- Its objective is to have maximum market share being a leader to set price it could play with numbers, although VPJ was priced low.

Determining demand- Basically HUL wanted to target VPJ as an all rounder healing aid, something that is available in every household. there seems to be low price sensitivity for VPJ.

Estimating cost- Charging a price that can cover costs. here due to low price of VPJ the sales have increased and having a monopoly it need not worry about covering costs. VPJ is an FMCG product which is used by consumers in their day to day life hence costs will be covered easily.

Analysing competitors costs, prices and offers- Although we control the petroleum jelly market, there are specific-use products that compete against the versatility of VPJ. Uses for purposes such as baby care, sunburn treatment, skin treatment, and lip care can be addressed by our competitors, both from products that are currently on the market and those being developed. Additionally, competition could be realized by new market entrants into the petroleum jelly market from established companies such as Johnson & Johnson.

Selecting a pricing method- Final keeping all the above mention constraints in mind the final price is set.