Pricing is the process of determining what a company will receive in exchange for its
product or service.
While setting price for a product, the marketer must follow these steps:
Earlier Snickers was an imported luxury chocolate on the lines of Hershey's chocolates.
Now, it has realized the potential of the Indian middle class market and brought down it's prices.
Moreover, it is looking to setup a plant in India.
A survey carried out by Snickers pointed out that there is a demand for Snickers in the middle class market of India. However, a chocolate bar like Snickers has an elastic demand.
Thus, to penetrate the market, Snickers positioned itself among the chocolates that were affordable, i.e. in the range of Rs.10 to Rs.30.
product or service.
While setting price for a product, the marketer must follow these steps:
01. Select the Pricing Objectives:
Changed from Maximum Market Skimming in 2004 to Maximum Market Share in 2012.Earlier Snickers was an imported luxury chocolate on the lines of Hershey's chocolates.
Now, it has realized the potential of the Indian middle class market and brought down it's prices.
Moreover, it is looking to setup a plant in India.
02. Determining Demand:
With the increasing purchase power of the common man in India, Snickers predicted a potential increase in it's sales if it reduces it's prices.A survey carried out by Snickers pointed out that there is a demand for Snickers in the middle class market of India. However, a chocolate bar like Snickers has an elastic demand.
Thus, to penetrate the market, Snickers positioned itself among the chocolates that were affordable, i.e. in the range of Rs.10 to Rs.30.
03. Costs Estimation:
Snickers consists of four main ingredients: Peanuts, nougat, caramel, chocolate.
Thus, it is extremely clear that the increase in price of any one of the ingredients will impact the price, or the size of the bar.
The size of the Snickers bar has been reducing over the years, owing to the worldwide increase in the price of peanuts. The following image shows the sharp increase in the price of peanuts.
Thus, it is extremely clear that the increase in price of any one of the ingredients will impact the price, or the size of the bar.
The size of the Snickers bar has been reducing over the years, owing to the worldwide increase in the price of peanuts. The following image shows the sharp increase in the price of peanuts.
04. Competitor Analysis:
The following table shows a list of competitors of Snickers and the comparisons of their prices.
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05. Selecting Pricing Methods:
There are 3 types of Pricing Methods:
- Markup Pricing
- Target-Return Pricing
- Perceived-Value Pricing
Snickers uses the third type.
06. Final Price:
Brands with high quality advertising tend to charge highly.
Also, consumers are willing to pay for known products.
However, quality is the king.
Snickers quality has stood the test of time abroad.
As it is a new entrant in the Indian market, it is justifiable to price it at Rs.15 and Rs.30
Snickers quality has stood the test of time abroad.
As it is a new entrant in the Indian market, it is justifiable to price it at Rs.15 and Rs.30
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