Setting a Pricing Policy:
Selecting the pricing Objective: To acquire Maximum Market Share is the objective.
The market for Parachute Hair Oil is price sensitive and a low price will stimulate its market growth. The costs of production and distribution will fall with accumulated production experience. According to 2012 survey Parachute has been able to get hold of the market share of 53% becoming the Brand Leader and it is the first brand in that segment.
Determining Demand: In India, customers prefer small frequent purchases. Parachute hair oil is available in different sizes thereby providing all the options to its customers. Parachute faces competition from Vatika, Bajaj, Dabur, etc, but it still remains the leader. It targets the rural along with the urban population. The price Catalog of Parachute Hair Oil is as follows.
Normal 200ml-Rs39, 20ml-Rs5; mini pack-Re1; Parachute Therapy 50ml-Rs190 Parachute Advansed 80ml-Rs27, 170ml-Rs48, 300ml-Rs80. Customers are loyal to this product and purchase this inspite of small changes in prices.
Estimating Costs: The cost is influenced by key raw materials, the cost of packaging and ingredient oil prices . The cost is different for each variant as each of them has different composition and is packed differently in various sizes. Total cost and the fixed cost together determine the total cost of the product.
Analyzing Competitors' Cost, Prices and Offers: As mentioned above, Parachute Hair Oil has a strong base of loyal customers. Presence of competitors does not really affect this product. But for new customers it is crucial that Parachute analyses the features offered by the competitors on their product and hence price its own product accordingly by subtracting the cost of those additional features.
Selecting a pricing Method: Parachute has perceived value pricing method and delivers its product to the customers at a price that they perceive feasible and appropriate.
Selecting the Final Price: The final price is selected keeping in mind the 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.
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Pricing Strategy For Parachute Hair Oil:
Analysis of 100ml Parachute hair oil
MRP : 28
Retailer Profit : 13%
Distributor selling price or Retailer cost price: 24.77876
Distributor profit margin : 4%
Distributor cost price : 23.82573
Company profit : 12%
Company Cost price : 21.27297
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