Pricing

Pricing

Pricing is an important function in Marketing. It is about setting the right price to a product. Pricing is the process of determining what a company will receive in exchange for its products. Pricing factors are manufacturing cost, market place, competition, market condition, and quality of product. 

Consumer psychology and pricing

Pizza hut uses price cues. It prices its products in an odd number. Example :Beverages like Cold coffee is priced at rupees 89, mango delight is priced at 69 .Appetizers like chicken skewers are  priced at 99 .This is method  as it conveys a notion of a discount or bargain .And also , as consumers tend to process prices in a left –to – right manner rather than by rounding.

Setting price

The price of the products of pizza hut is set in following steps:

Step 1: Price Objective

The main pricing objective adopted by pizza hut is maximum market share. They set a price that maximizes the market share that they hold. They practice the market – penetration pricing. It aims at the product – quality leadership .It aims to be the product – quality leader in the market.

Step 2: Demand Determination

Pizza hut tries to charge a higher price compared to its competitors and still get the business .They convinces the customers that they offer the total cost of ownership. They prefer customers who are fewer prices sensitive.

Step 3: Cost Estimation

The costs involved in pizza hut are the variable costs and the fixed costs. The average cost is determined .And the pricing of the products are based on the price that covers the costs at the given level of production.

Step 4: Competitor’s costs, prices and offers analyzed

The competitor’s prices that are pricing by dominos, papa johns, u.s pizza etc are compared for different products before the pricing is done. It is also made sure that the price objectives of the pizza hut are met.

Step 5: Selection of Pricing Method

The pricing method that is followed by pizza hut is the mark up pricing. In this method, standard mark up price is added to the product’s cost.

Step 6: Final Price

Pizza hut is able to high pricing. Pizza hut has a relative high quality and high relative advertising, which enables it to go for high pricing compared to its competitors.

Adapting the Price

Geographical Pricing

Geographical pricing is when the company prices different prices to different prices to its different customers in different customers in different locations. Pizza hut International prices differently compared to pizza hut India. The pricing varies in different countries. Example: A pan size pizza is priced is 3$ to 5 $, whereas in India it is 120 rupees. 

Promotional Pricing

Pizza hut adopts the special- event pricing and the psychological pricing. The special – event pricing is usd especially adopted in festive times. Example: Pizza hut launched 15 new Indian varieties on its 15^th year in India, and special pricing on diwali festival etc. And psychological pricing is the ending the price with an odd number, as explained earlier.