Description
Industrial pricing- b2b
“Industrial Pricing”
Ihr Logo
What is Price?
? Pricing : A critical part of business marketing strartegy.
Role of a business Marketing Manager in determining price
(A) Focus on Presenting superior value of products. (B) Focus on Product quality and not low price.
(C) Example : Texan Instruments
Your Logo
Special Meaning Of Price
? Highest Delivered Value
? Overall perceived value
? Total Cost
Your Logo
Cost Analysis
? TC = FC + VC
? For making profitable marketing decisions the industrial
marketer must identify and classify the costs (i.e) Production , Marketing and distribution costs.
Classification / Types of cost :
? Fixed Cost : Cost that do not vary with production Eg : Rent ;
Intrest changes
Your Logo
? Variable Cost : Cost that vary in direct proportion to the levels
of production Eg: Raw materials ; Direct labour costs.
? Total Cost : Fixed cost + Variable Cost
? Semi-Variable Cost : Cost that vary with changes in o/p but not
in direct proportion to quantities produced. They have components of both FC and VC.
E.g : Equipment repair and Maintainence.
Your Logo
? Direct Cost : Fixed or variable cost that are incurred directly for
a specific product or sales territory . E.g : Selling expenses ; Raw materials.
? Indirect Cost : Fixed cost or variable cost that can be traced
indirectly to sales territory or a product .
? Allocated Cost : Costs that support a number of activities but
cannot be objectively assigned to a market . E.g : Administrative overhead ; Corporate advertising .
Your Logo
Important points to be considered for cost analysis :
? Cost can vary at different levels of production and
economies of scale can be planned.
? Accumulated experience helps in reduction of costs.
? The effect of break-even analysis on costs and sales
volume.
Your Logo
Learning Curve
? Also known as the Experience Curve.
? Specifies that certain costs (particularly VC) decline as
cumulative volume of production increases.
? Avg CPU decreases with increase in production and sales.
Your Logo
? Every time the Volume is doubled Unit cost of products fell by 10 –
30 %
? It gives an oppurtunity to obtain cost reduction and efficiency
improvements.
Break Even Analysis :
It is a financial technique which is used by the marketer to consider different prices and possible effects on sales volume and profits.
Break – Even Volume = FC/ ( SP – VC )
Your Logo
Competitive Analysis
? Marketers regard „Competitive Level Pricing „ as the most
important pricing strategy.
? “Price” is the only one factor of the several factors considered
in buyers cost - benefit analysis.
? Once the industrial firm gets the information about competitors
it can use price to position its product „? vis – a – vis competitors “
? Competition sets an upper limit on price.
Your Logo
Competitors Response To Price Changes :
? Some competitors do not react strongly to price changes as
they are confident of customer loyalty.
? Some react in selective manner : a.) Weak competitor – Small /
Slow reaction
b.) Major Competitor – Large Reaction
? Some fight to finish !
Your Logo
Competitive prices & Price wars
? Most companies prefer value addition to product than price
reduction.
? One aggressive price strategy causes for price wars.
? Price cutting doesn’t achieve immediate sales goal.
? “Pricing is like playing chess”
Your Logo
Evaluating Competitive threat
? Is there response that would cost you less than the
preventable sales loss?
? Price cuts only on those customers likely to be attracted to the
competitors’ offer.
? Price cuts only on particular geographic area, distribution channel
or product line where the competitors has most to lose from price reduction.
? Capitalize on any competitive advantages to increase the value of
your offer as an alternative to matching the price.
Your Logo
Continued….
? Will the multiple responses that may be required to match
competitors’ price still cost less than available sales loss?
?
Allow competitors to win where it is less damaging such as more price sensitive, lower margin segment.
?
Create barrier that make it more difficult for competitors to reach less price sensitive and more profitable customer segments.
? Is your position in other markets (product or geographic) at risk if the
competitor increases market share? Does the value of all other markets that are the risk justify the cost of the strategy response?
Your Logo
Pricing Method
? Cost-based Pricing
? Value-based pricing
? Competition- based pricing
Your Logo
Cost Based Pricing
Cost Variable Cost per unit Fixed Cost Expected sales volume in numbers 600 20,00,00,000 10,00,000 Rs
Your Logo
Advantages • • •
Fair to both buyers & sellers Sellers earn a fair return on investment Suppliers can estimate costs more easily than they can estimate demand Price competition is minimized if all suppliers use cost-based pricing
•
Disadvantages • • • •
It ignores Current Demand ,Customer’s perceived value ,Competition Many supplier firms lack an accurate understanding of costs Shared fixed costs Costs are based on expected (or forecasted ) sales volume
Your Logo
Value Based Pricing
• Customers perception towards value of the product.
• Group of Buyers : • Price buyer : Offers Basic Product • Value Buyer : Offer additional product feature and extended warranty • Loyal Buyer :Invest more in CRM
• Example : Dupont Paint manufacturer
Product Pr ice ($ per pound) Quality Delivery Period
Standard Premium
100 105
Lower Quality Higher Quality Logo Your
Within 2 weeks Within 1 week
Advantages :
•
It takes into account industry structure, segmentation, competitor pricing practices, and substitutes and alternatives, all of which can make pricing more coherent and complex. It is helpful to price new products or "breakthrough" products. Pricing based on several customer-focused methods: expert opinion, customer surveys, price experiments (for example by using conjoint-analysis theories and techniques), and analysis of past, present and expected market data and conditions.
• •
Disadvantages :
• • •
It requires more data gathering and analysis than competition-based or cost-plus approaches. The process for determining price is more complex than other approaches because it uses "soft" market data in addition to "hard" market data. Most methods used to gather data for this type of pricing are relatively specialized and require expertise to convert raw data to information to knowledge
Your Logo
Competition Based Pricing
Price based on which the competitors charges
Type of Competition
Monopolistically competitive markets
Pricing Strategy
• Firms with successful product differentiation strategies charge higher prices • Some firms may charge lower prices to get an edge on the competition. e.g : Ambuja Cement, Bangur Cement, ACC Cement • Do not compete on price to avoid price wars, competing on product differentiation instead • Periodically, a price leader may emerge and others will drop their prices e.g: ONGC & RIL (in exploration and production base i.e upstream) • No competition, so has greatest price-setting ability •May see predatory pricing, the practice of charging very low prices with the intent to destroy the competition e.g. BHEL
Your Logo
Oligopolies
Monopoly
Advantages
• •
Setting prices in relation to competitor’s prices Price is set the same as dominant competitor , or slightly higher or lower.
•
Generally , the supplier with highest market share provides price leadership.
Disadvantages • •
Difficult for marketing managers to know competitors prices accurately. Many suppliers keep on reducing prices to match competitor’s prices thus giving away value of their market offerings.
Your Logo
Pricing Strategies
Pricing Strategies
Competitive Bidding And Negotiation Pricing New Products
Pricing across the Product Life cycle
1)
Competitive Bidding and Negotiation
What is Competitive bidding?????
Your Logo
Competitive bidding (Predominant)
Government Undertakings
Public Sector Companies
? If Value of Tender is small, just one bidder is selected. ? If Value of Tender is more, multiple bidders are selected.
Competitive bidding are of two types namely : 1. Closed Bidding 2. Open Bidding
Your Logo
Strategy For Competitive Bidding
? Commonly used strategy = Probabilistic Strategy
Assumption :
(i) Pricing objective is Profit Maximization (ii) Buying Organization will chose the lowest price bid. Variables : (a) Price of bid (b) Expected profit if bid price is accepted (c) Probability of Acceptance of the Bid.
Your Logo
Basic eqn..
Where,
E(A) = P(A) X T(A)
E(A) = Expected Profit at bid price P(A) = Probability of Acceptance Of Bid Price T(A) = Profit if Bid Price is Accepted Eg : Bid Price (A) 450 430 400 360 330 Cost Per Unit (C) 350 350 350 350 350 Probability Of Win P(A) 0.00 0.15 0.50 0.90 1.00
Expected Profit Profit T(A) = A - C E(A)=P(A)xT(A)
100 80 50 10 (20)
Your Logo
0
12 25 9 (20.00)
2. Pricing New Products
i. Skimming Strategy
? For Market Segment not sensitive to initial high price ? Break even reached soon due to larger profits. ? Earns profit by selling fewer items at a higher price. ? Disadvantageous : Attractive Profits attract competition. ? Advantageous : Products which are distinct, high on Technology,
production costs decline.
Your Logo
ii. Penetration Strategy
? Organisation makes profit by selling a large number of Product items at
a lower profit per item.
? Time Segmentation = Skimming Price Strategy + Penetration Strategy
Your Logo
Pricing Across The Product Life Cycle
PHASE STRATEGY more competitors enter the market, Buyers look for alternatives. Focus : Lowering the prices, product diffrentiation, Product Line Extension & building new market segments. Competitors Stronger and Aggressive, Buyers do cost – benefit Analysis. Focus : Eating into Competitor’s Market Share. Lowering the Prices to match the Competitor’s Prices.
Growth Stage
Maturity Stage
Decline Stage
1. If Product quality is good and service is dependable then needn’t cut price but reduce the costs. 2. If competitors have withdrawn from the market, selective increase in some segments which is not price sensitive. Your Logo
Flexible Pricing Strategy
? Flexible Pricing Strategy means adjusting the prices or profitability for
certain products and services, when market conditions change.
? Marketing conditions : demand slow down, recessionary periods,
double –
digit inflation and extreme competition.
? Negotiations occur. Target pricing has given way to flexible pricing
decisions.
? Quantity discounts, extended warranty period, free supply of spare –
parts and extended credit all part of Flexible Pricing.
Your Logo
PRICING POLICIES
? Industrial marketers deal with different types of customers (users,
OEM’s & dealers).
? who buy in various quantities and are located in various
geographical locations.
? For eg : electric motor is a product with different HP ,speeds and
applications.
? Its therefore , necessary for a manufacturer of electric motor to set
the base prices for entire range of products items manufactured.
Your Logo
Key Terms Associated With Pricing.
1) List price : also called as list or the basic price price of a product consisting of various sizes or specification.
?
It is published statementof basic prices which is sometimes distributed to the customers.
Your Logo
Contd…
? The list price statement indicate the effective date of its
applicability and mentions the extra charges applicable for optional product feature (if any) the excise duty, freight, sales tax, octroi and/or transit insurance.
? Application Of Discounts To Industrial Customers. ? rrakesh\Pg 330 (1).JPG
Your Logo
2. Geographical pricing :
?
This pricing consist of deciding how to price the company’s product to customers in different geographical location.
?
Should the company charge higher prices to customers located at distant area in order to cover the higher transportation cost.
?
It also involves sales tax and other levies like octroi or entry tax which bears on the final (landed) price to customers.
Your Logo
? In geographical pricing there are generally two methods of pricing :
1.
?
For Ex-factory:When a seller quotes a buyer “exfactory price” it means that freight and transit insurance would be beared by buyer.
2. ?
FOR Destination:- “mean free on road”. Seller would be bearing the freight cost.
?
However, transit insurance cost which are in small amounts are generally absorbed by seller.
Under open insurance policy.
Your Logo
?
3. Taxes and levies:?
In india knowledge of sales tax or CST , state tax , octroi, entry tax and tax in various states is necessary for an industrial marketer. Sometimes business are won or loss due to different level of central and state sales taxes.
?
Your Logo
Commercial Terms and Condition of Payment in Industrial Marketing
? It is important for sales/marketing persons to have knowledge and
understanding of commercial matters at of preparation of bids (or Quotations), and while negotiating with industrial customers.
Your Logo
Commercial Terms and Condition of Payment in Industrial Marketing
? Direct Payment. ? Payments Through Bank. ? 95/5 or 98/2 per cent Payment Terms. ? Bank Guarantees. ? Price Basis. ? LD/Penalty.
Your Logo
Commercial Terms and Condition of Payment in Industrial Marketing
? Direct Payment. ? Cash or Credit depending on the agreement between the buyer and seller. ? The seller sends the consignee copy of LR to the branch sales
representative who collects the payment from the buyer before handing over consignee copy of LR.
? Payments Through Bank. ? LC (Letter of Credit) ? DP (Documents against payment) ? DA (Document Acceptance)
Your Logo
Commercial Terms and Condition of Payment in Industrial Marketing
? 95/5 or 98/2 per cent Payment Terms ? 95% payment is made by the govt. customer after the
suppliers send the bill along with the proof of despatch.
? Bank Guarantees ? BG is the security deposit furbished by the supplier to
buyer with in two weeks for the date of placement of a order.
Your Logo
? Price Basis
? Generally, the prices for industrial products are quoted
excluding excise duty, sales tax or any other Government duties (Octroi, entry tax)
? LD/Penalty ? If the supplier fails on delivery, the purchaser will enforce
the penalty by use of liquidated damages or riskpurchase clauses.
Your Logo
Role of Leasing
? The firm can lease directly to the business customer by
working out lease and financing arrangements itself.
? the firm arranges leasing through other large organizations
who from credit subsidiaries to provide leasing to business buyers.
? the firm arranges leasing to its business customers through a
bank or financial institution who is involved in leasing industrial equipment.
Lease V/S Purchase
Your Logo
Types of Leases
? Financial Leases
? Operating Leases
Pricing Strategy in Leasing
Your Logo
Case Study
SL Business Systems (India) Limited
Ihr Logo
Case
? SL Business Systems (India) Ltd was a joint venture of a
leading Japanese corporation & a well-known Indian engineering corporation.
? Superior quality of the printer with high initial price. ? Market survey. ? The long term monetary benefits of the printer over others. ? Distribution Channel.
Your Logo
Problem
? Sales Target was not achieved of the first quarter of
2006-07.
? High price.
? Educate current & potential customers.
? Market survey 5-6 months.
Your Logo
Solution
? B2B Direct sales. ? Product Awareness. ? Marketing & Advisement of new technology. ? Survey.
Your Logo
1. About the case 2. Problem 3. Action taken (how pricing strategy have a greater impact on industrial marketing)
Your Logo
doc_643385975.pptx
Industrial pricing- b2b
“Industrial Pricing”
Ihr Logo
What is Price?
? Pricing : A critical part of business marketing strartegy.
Role of a business Marketing Manager in determining price
(A) Focus on Presenting superior value of products. (B) Focus on Product quality and not low price.
(C) Example : Texan Instruments
Your Logo
Special Meaning Of Price
? Highest Delivered Value
? Overall perceived value
? Total Cost
Your Logo
Cost Analysis
? TC = FC + VC
? For making profitable marketing decisions the industrial
marketer must identify and classify the costs (i.e) Production , Marketing and distribution costs.
Classification / Types of cost :
? Fixed Cost : Cost that do not vary with production Eg : Rent ;
Intrest changes
Your Logo
? Variable Cost : Cost that vary in direct proportion to the levels
of production Eg: Raw materials ; Direct labour costs.
? Total Cost : Fixed cost + Variable Cost
? Semi-Variable Cost : Cost that vary with changes in o/p but not
in direct proportion to quantities produced. They have components of both FC and VC.
E.g : Equipment repair and Maintainence.
Your Logo
? Direct Cost : Fixed or variable cost that are incurred directly for
a specific product or sales territory . E.g : Selling expenses ; Raw materials.
? Indirect Cost : Fixed cost or variable cost that can be traced
indirectly to sales territory or a product .
? Allocated Cost : Costs that support a number of activities but
cannot be objectively assigned to a market . E.g : Administrative overhead ; Corporate advertising .
Your Logo
Important points to be considered for cost analysis :
? Cost can vary at different levels of production and
economies of scale can be planned.
? Accumulated experience helps in reduction of costs.
? The effect of break-even analysis on costs and sales
volume.
Your Logo
Learning Curve
? Also known as the Experience Curve.
? Specifies that certain costs (particularly VC) decline as
cumulative volume of production increases.
? Avg CPU decreases with increase in production and sales.
Your Logo
? Every time the Volume is doubled Unit cost of products fell by 10 –
30 %
? It gives an oppurtunity to obtain cost reduction and efficiency
improvements.
Break Even Analysis :
It is a financial technique which is used by the marketer to consider different prices and possible effects on sales volume and profits.
Break – Even Volume = FC/ ( SP – VC )
Your Logo
Competitive Analysis
? Marketers regard „Competitive Level Pricing „ as the most
important pricing strategy.
? “Price” is the only one factor of the several factors considered
in buyers cost - benefit analysis.
? Once the industrial firm gets the information about competitors
it can use price to position its product „? vis – a – vis competitors “
? Competition sets an upper limit on price.
Your Logo
Competitors Response To Price Changes :
? Some competitors do not react strongly to price changes as
they are confident of customer loyalty.
? Some react in selective manner : a.) Weak competitor – Small /
Slow reaction
b.) Major Competitor – Large Reaction
? Some fight to finish !
Your Logo
Competitive prices & Price wars
? Most companies prefer value addition to product than price
reduction.
? One aggressive price strategy causes for price wars.
? Price cutting doesn’t achieve immediate sales goal.
? “Pricing is like playing chess”
Your Logo
Evaluating Competitive threat
? Is there response that would cost you less than the
preventable sales loss?
? Price cuts only on those customers likely to be attracted to the
competitors’ offer.
? Price cuts only on particular geographic area, distribution channel
or product line where the competitors has most to lose from price reduction.
? Capitalize on any competitive advantages to increase the value of
your offer as an alternative to matching the price.
Your Logo
Continued….
? Will the multiple responses that may be required to match
competitors’ price still cost less than available sales loss?
?
Allow competitors to win where it is less damaging such as more price sensitive, lower margin segment.
?
Create barrier that make it more difficult for competitors to reach less price sensitive and more profitable customer segments.
? Is your position in other markets (product or geographic) at risk if the
competitor increases market share? Does the value of all other markets that are the risk justify the cost of the strategy response?
Your Logo
Pricing Method
? Cost-based Pricing
? Value-based pricing
? Competition- based pricing
Your Logo
Cost Based Pricing
Cost Variable Cost per unit Fixed Cost Expected sales volume in numbers 600 20,00,00,000 10,00,000 Rs
Your Logo
Advantages • • •
Fair to both buyers & sellers Sellers earn a fair return on investment Suppliers can estimate costs more easily than they can estimate demand Price competition is minimized if all suppliers use cost-based pricing
•
Disadvantages • • • •
It ignores Current Demand ,Customer’s perceived value ,Competition Many supplier firms lack an accurate understanding of costs Shared fixed costs Costs are based on expected (or forecasted ) sales volume
Your Logo
Value Based Pricing
• Customers perception towards value of the product.
• Group of Buyers : • Price buyer : Offers Basic Product • Value Buyer : Offer additional product feature and extended warranty • Loyal Buyer :Invest more in CRM
• Example : Dupont Paint manufacturer
Product Pr ice ($ per pound) Quality Delivery Period
Standard Premium
100 105
Lower Quality Higher Quality Logo Your
Within 2 weeks Within 1 week
Advantages :
•
It takes into account industry structure, segmentation, competitor pricing practices, and substitutes and alternatives, all of which can make pricing more coherent and complex. It is helpful to price new products or "breakthrough" products. Pricing based on several customer-focused methods: expert opinion, customer surveys, price experiments (for example by using conjoint-analysis theories and techniques), and analysis of past, present and expected market data and conditions.
• •
Disadvantages :
• • •
It requires more data gathering and analysis than competition-based or cost-plus approaches. The process for determining price is more complex than other approaches because it uses "soft" market data in addition to "hard" market data. Most methods used to gather data for this type of pricing are relatively specialized and require expertise to convert raw data to information to knowledge
Your Logo
Competition Based Pricing
Price based on which the competitors charges
Type of Competition
Monopolistically competitive markets
Pricing Strategy
• Firms with successful product differentiation strategies charge higher prices • Some firms may charge lower prices to get an edge on the competition. e.g : Ambuja Cement, Bangur Cement, ACC Cement • Do not compete on price to avoid price wars, competing on product differentiation instead • Periodically, a price leader may emerge and others will drop their prices e.g: ONGC & RIL (in exploration and production base i.e upstream) • No competition, so has greatest price-setting ability •May see predatory pricing, the practice of charging very low prices with the intent to destroy the competition e.g. BHEL
Your Logo
Oligopolies
Monopoly
Advantages
• •
Setting prices in relation to competitor’s prices Price is set the same as dominant competitor , or slightly higher or lower.
•
Generally , the supplier with highest market share provides price leadership.
Disadvantages • •
Difficult for marketing managers to know competitors prices accurately. Many suppliers keep on reducing prices to match competitor’s prices thus giving away value of their market offerings.
Your Logo
Pricing Strategies
Pricing Strategies
Competitive Bidding And Negotiation Pricing New Products
Pricing across the Product Life cycle
1)
Competitive Bidding and Negotiation
What is Competitive bidding?????
Your Logo
Competitive bidding (Predominant)
Government Undertakings
Public Sector Companies
? If Value of Tender is small, just one bidder is selected. ? If Value of Tender is more, multiple bidders are selected.
Competitive bidding are of two types namely : 1. Closed Bidding 2. Open Bidding
Your Logo
Strategy For Competitive Bidding
? Commonly used strategy = Probabilistic Strategy
Assumption :
(i) Pricing objective is Profit Maximization (ii) Buying Organization will chose the lowest price bid. Variables : (a) Price of bid (b) Expected profit if bid price is accepted (c) Probability of Acceptance of the Bid.
Your Logo
Basic eqn..
Where,
E(A) = P(A) X T(A)
E(A) = Expected Profit at bid price P(A) = Probability of Acceptance Of Bid Price T(A) = Profit if Bid Price is Accepted Eg : Bid Price (A) 450 430 400 360 330 Cost Per Unit (C) 350 350 350 350 350 Probability Of Win P(A) 0.00 0.15 0.50 0.90 1.00
Expected Profit Profit T(A) = A - C E(A)=P(A)xT(A)
100 80 50 10 (20)
Your Logo
0
12 25 9 (20.00)
2. Pricing New Products
i. Skimming Strategy
? For Market Segment not sensitive to initial high price ? Break even reached soon due to larger profits. ? Earns profit by selling fewer items at a higher price. ? Disadvantageous : Attractive Profits attract competition. ? Advantageous : Products which are distinct, high on Technology,
production costs decline.
Your Logo
ii. Penetration Strategy
? Organisation makes profit by selling a large number of Product items at
a lower profit per item.
? Time Segmentation = Skimming Price Strategy + Penetration Strategy
Your Logo
Pricing Across The Product Life Cycle
PHASE STRATEGY more competitors enter the market, Buyers look for alternatives. Focus : Lowering the prices, product diffrentiation, Product Line Extension & building new market segments. Competitors Stronger and Aggressive, Buyers do cost – benefit Analysis. Focus : Eating into Competitor’s Market Share. Lowering the Prices to match the Competitor’s Prices.
Growth Stage
Maturity Stage
Decline Stage
1. If Product quality is good and service is dependable then needn’t cut price but reduce the costs. 2. If competitors have withdrawn from the market, selective increase in some segments which is not price sensitive. Your Logo
Flexible Pricing Strategy
? Flexible Pricing Strategy means adjusting the prices or profitability for
certain products and services, when market conditions change.
? Marketing conditions : demand slow down, recessionary periods,
double –
digit inflation and extreme competition.
? Negotiations occur. Target pricing has given way to flexible pricing
decisions.
? Quantity discounts, extended warranty period, free supply of spare –
parts and extended credit all part of Flexible Pricing.
Your Logo
PRICING POLICIES
? Industrial marketers deal with different types of customers (users,
OEM’s & dealers).
? who buy in various quantities and are located in various
geographical locations.
? For eg : electric motor is a product with different HP ,speeds and
applications.
? Its therefore , necessary for a manufacturer of electric motor to set
the base prices for entire range of products items manufactured.
Your Logo
Key Terms Associated With Pricing.
1) List price : also called as list or the basic price price of a product consisting of various sizes or specification.
?
It is published statementof basic prices which is sometimes distributed to the customers.
Your Logo
Contd…
? The list price statement indicate the effective date of its
applicability and mentions the extra charges applicable for optional product feature (if any) the excise duty, freight, sales tax, octroi and/or transit insurance.
? Application Of Discounts To Industrial Customers. ? rrakesh\Pg 330 (1).JPG
Your Logo
2. Geographical pricing :
?
This pricing consist of deciding how to price the company’s product to customers in different geographical location.
?
Should the company charge higher prices to customers located at distant area in order to cover the higher transportation cost.
?
It also involves sales tax and other levies like octroi or entry tax which bears on the final (landed) price to customers.
Your Logo
? In geographical pricing there are generally two methods of pricing :
1.
?
For Ex-factory:When a seller quotes a buyer “exfactory price” it means that freight and transit insurance would be beared by buyer.
2. ?
FOR Destination:- “mean free on road”. Seller would be bearing the freight cost.
?
However, transit insurance cost which are in small amounts are generally absorbed by seller.
Under open insurance policy.
Your Logo
?
3. Taxes and levies:?
In india knowledge of sales tax or CST , state tax , octroi, entry tax and tax in various states is necessary for an industrial marketer. Sometimes business are won or loss due to different level of central and state sales taxes.
?
Your Logo
Commercial Terms and Condition of Payment in Industrial Marketing
? It is important for sales/marketing persons to have knowledge and
understanding of commercial matters at of preparation of bids (or Quotations), and while negotiating with industrial customers.
Your Logo
Commercial Terms and Condition of Payment in Industrial Marketing
? Direct Payment. ? Payments Through Bank. ? 95/5 or 98/2 per cent Payment Terms. ? Bank Guarantees. ? Price Basis. ? LD/Penalty.
Your Logo
Commercial Terms and Condition of Payment in Industrial Marketing
? Direct Payment. ? Cash or Credit depending on the agreement between the buyer and seller. ? The seller sends the consignee copy of LR to the branch sales
representative who collects the payment from the buyer before handing over consignee copy of LR.
? Payments Through Bank. ? LC (Letter of Credit) ? DP (Documents against payment) ? DA (Document Acceptance)
Your Logo
Commercial Terms and Condition of Payment in Industrial Marketing
? 95/5 or 98/2 per cent Payment Terms ? 95% payment is made by the govt. customer after the
suppliers send the bill along with the proof of despatch.
? Bank Guarantees ? BG is the security deposit furbished by the supplier to
buyer with in two weeks for the date of placement of a order.
Your Logo
? Price Basis
? Generally, the prices for industrial products are quoted
excluding excise duty, sales tax or any other Government duties (Octroi, entry tax)
? LD/Penalty ? If the supplier fails on delivery, the purchaser will enforce
the penalty by use of liquidated damages or riskpurchase clauses.
Your Logo
Role of Leasing
? The firm can lease directly to the business customer by
working out lease and financing arrangements itself.
? the firm arranges leasing through other large organizations
who from credit subsidiaries to provide leasing to business buyers.
? the firm arranges leasing to its business customers through a
bank or financial institution who is involved in leasing industrial equipment.
Lease V/S Purchase
Your Logo
Types of Leases
? Financial Leases
? Operating Leases
Pricing Strategy in Leasing
Your Logo
Case Study
SL Business Systems (India) Limited
Ihr Logo
Case
? SL Business Systems (India) Ltd was a joint venture of a
leading Japanese corporation & a well-known Indian engineering corporation.
? Superior quality of the printer with high initial price. ? Market survey. ? The long term monetary benefits of the printer over others. ? Distribution Channel.
Your Logo
Problem
? Sales Target was not achieved of the first quarter of
2006-07.
? High price.
? Educate current & potential customers.
? Market survey 5-6 months.
Your Logo
Solution
? B2B Direct sales. ? Product Awareness. ? Marketing & Advisement of new technology. ? Survey.
Your Logo
1. About the case 2. Problem 3. Action taken (how pricing strategy have a greater impact on industrial marketing)
Your Logo
doc_643385975.pptx