Course Code: MKT501 Course Title: Marketing Management
Course Instructor: Dr, Ashish Pandey
Academic Task No.: 03 Academic Task Title:
Pricing Strategy
Date of Allotment: 04-11-22 Date of
submission: 18-11-22
Student’s Roll no: A13 Student’s
Reg. no: 12111810
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About COP 26- In an effort to have
a smaller negative impact on the environment, the automotive industry is
currently going through a transitional phase where it is converting to
alternate and less energy-intensive forms of mobility. Following the 26th
Conference of Parties (COP 26) to the United Nations, countries have been
extending their commitment to a larger decrease in greenhouse gas emissions. New
Nationally Determined Contributions (NDC) have been declared by more than 120
nations, which together account for nearly 52% of global emissions.
Government
Initiatives- The announcement that producers of
electric two-wheelers can offer a reduction of close to 40% of the price of
their scooter or bike has undoubtedly improved attitudes among both purchasers
and manufacturers. The FAME-II electric vehicle policy modifications were
released on Friday, and manufacturers have praised the nation's efforts to
promote EV transportation.
Govt. efforts to adopt EV mobility have been praised by
manufacturers- "The modification in the FAME
policy, boosting the subsidy by 50% per KWh is a great move," said Tarun
Mehta, CEO and co-founder of Ather Energy. Despite the epidemic, sales of
electric two-wheelers have increased, and with this additional subsidy, we
predict that sales will rise and reach 6 million+ units by 2025, disrupting the
industry. In the upcoming six months, Ather Energy already has plans to extend
distribution to 30 locations, and the enhanced subsidy will significantly boost
consumer demand. India will become the EV manufacturing hub thanks to the
government's ongoing support for encouraging the usage of EVs and a strong
focus on domestically made electric two-wheelers.
Sudarshan Venu,
Joint Managing Director of TVS Motor Company said “We appreciate the
government's ongoing support for electric vehicles (EVs)," stated
Sudarshan Venu, Joint Managing Director of TVS Motor Company. Future-proof
mobility solutions are crucial, and TVS is making major investments in this
area. The adoption of electric two-wheelers will rise as a result of improved
incentives. Future technology should be developed locally as a result of such
policy guidance.
Pricing Strategy for Electric 2-Wheeler
Ø Psychological Pricing Strategy:
Product pricing is a masterful psychological manipulation technique that we are
exposed to on daily basis from simply picking up a gallon of milk for Rs 24.99
to pre-ordering an iPhone for Rs 69,999. We try to make buying decisions based
on value use and durability but despite our best efforts these pricing games subconsciously
affect all of our buying decisions considering this how exactly our products
priced.
Starting off we
have the clearest pricing technique that is Charm pricing, or we can call Psychological pricing strategy.
When the price ends in 299 or 54999. This is less about the ending number and
more about reducing the leading number by one. This is especially effective for
prices that are just under a new place value like 10, 100 or 1000 Rupees. Our
brain uses the first number as an anchor and uses this to perceive the cost of
the certain product when we see the price Rs 54,999, the anchor value is 54
Rather than 55. Despite the actual cost being nearly 55 thousand Rupees, by
reducing the perceived cost companies are able to make their product seem like
a greater value test increasing the livelihood of a conversion. We can use the
Psychological Pricing Strategy like an Ola; we can mention price i.e., Staring
from Rs. 99,999 on our website which sounds good then Rs 1 Lakh.
Here I am
mentioning about the Electric 2 wheeler’s feature that we can highlight to look
the price costly to the customers.
Then we can also
mention about the speed whatever it is going to be, we can specify it in
kilometre per hour. We can also adopt the important philosophy, with this newly
launched electric and that have become really pioneer in this field because
that the kind of digital technology or the philosophy that we can adopt with
the sustainable marketing philosophy. We can rather adopt the next step in the
digital marketing that is the artificial intelligence in the vehicle. We can unlock
before we reach, or we can navigate as well.
We can specify
about the Smart Onboard Sensors, which we can connect with our phone, and we
will be able to unlock as we approach to the vehicle. So that is actually an
automatic keyless experience.
Ø Exclusive Pricing-
Logically, we want the best value for the cheapest price but in practice we
often getting exclusive product for a higher price. The best example of this is
Apple, they do not offer the best specs or the latest technology in fact they
often lack behind the market whether it is LED implementation or DDR4 RAM, but
this does not stop Apple from selling millions of iPhones and MacBook. The
thing is Apple is not selling a phone or a laptop. They are selling a lifestyle
and a social image.
Demand of e-vehicles in India
become more in last three years. People worldwide are taking steps to do good
for the environment. In India, everyone has been taking a step forward to
reduce carbon footprints. One pivotal decision came with the country deciding
to switch to a completely electric mode by 2023.
Keeping this
decision in mind, the last few years have seen quite a few players have
ventured into the market of electric vehicles. The numbers have gone up so much
that a report by the State of heavy industries states that the number of
registered EVs has gone up in the last three years. In the year 2017-18, the
number of electric vehicles increased to 143,358 units, and in the following
year of 2018-19, there was yet another increase of 167,041 units.
Overall, in India,
has been manufacturing electric vehicles and in fact, the numbers out on the
roads include a fair share of electric two-wheelers, three-wheelers and buses
as well. The biggest reason for the surge in the manufacturing of electric
vehicles is that the government has been providing significant incentives under
the FAME India scheme, which is looking to reduce the difference between the
costs of electric cars and ICE vehicles.
Scheme of EV in India-
Along with the incentives under the FAME India program, the government of India
is also taking more steps towards promoting more electric vehicles by reducing
the GST component from 18% to 5%. Along with all these measures being
implemented, the government is also granting an exception from permits for all
those who own electric vehicles that operate on batteries that run on ethanol
and methanol.
India, as a
country, has the largest population of youths, which is why they happen to make
up a large percentage of the market. To increase the popularity of gearless e
scooters and bikes, the Ministry of Road Transport and Highways has also
decided to grant licenses to kids between the age of 16 and 18. It is
understandable that with all these steps being undertaken, the government is
trying very hard to get more people to switch to the electric mode of
transport.
It is a refreshing
break to see people joining hands to make it possible for India to live the
dreams of switching entirely to the electric mode of transport. Along with
helping reduce the pollution and carbon footprints level in India, the one
other benefit of switching to electric vehicles is that people can cut down on
expenses that they would have to spend on fuel.
All the reforms
and schemes that the government has introduced have pioneered the popularity of
electric vehicles, and as a result, the last three years have seen such a good
market for electric cars. This demand increase over the previous three years is
only set to double in the coming years.
With important
things taken care of, the only thing that needs to be taken care of is charging
stations that can help people charge their electric vehicles. The government is
also making amends to ensure that there are plenty of charging points available
to meet the manufacturing numbers of the electric cars going on the road.
Since the benefits
to both the people and the environment are plenty, there is no denying that the
demand for electric vehicles is at its highest today. Slowly and gradually,
even the most prominent automobile players are rising to the occasion of
manufacturing electric vehicles that give optimum results both on-road and
off-road.
Pricing strategies:
It refer to the processes and methodologies businesses use to set prices for
their e vehicle in India. There are different pricing strategies to choose from
but some of the more common ones include:
1. Value-based
pricing
2. Competitive
pricing
3. Price
skimming
4. Cost-plus
pricing
5. Penetration
pricing
6. Economy
pricing
7. Dynamic
pricing
Many e-vehicle companies
focus on acquisition to grow their business, but studies have shown that small
variations in pricing can raise or lower revenue by 20-50%. There's a missed
opportunity in the business world to see immediate growth for relatively little
effort.
Because most
businesses spend less than 10 hours per year thinking about pricing, there's a
lot of untapped growth potential in optimizing what you charge. In fact,
choosing the best pricing method is a more powerful growth lever than customer
acquisition. In some cases, it can be up to 7.5 times more powerful than
acquisition.
Effective Pricing Strategies for E-Vehicle:
Having an effective pricing strategy helps hard position by building trust with
your customers, as well as meeting e vehicle goals. Let's compare and contrast
the messaging that a strong pricing strategy sends in relation to a weaker one.
Ø A winning pricing strategy: Portrays
value- The word cheap has two meanings. It can
mean a lower price, but it can also mean poorly made. There's a reason people
associate cheaply priced products with cheaply made ones. Built into the higher
price of a e-vehicle is the assumption that it's of higher value.
Ø Convinces customers to buy:
A high price may convey value, but if that price is more than a potential
customer is willing to pay, it won't matter. A low price will seem cheap and
get your product passed over. The ideal price is one that convinces people to
purchase offering over the similar e-vehicle that competitors have to offer.
A weak pricing strategy e-vehicle:
Makes customers feel uncertain about buying- Just as the right price is one
that customers will pull the trigger on quickly, a price that's too high or too
low will cause hesitation.
Ø Targets the wrong customers-
Some customers prefer value, and some prefer luxury. You have to price your e-vehicle
to match the type of customer it is targeted towards.
There are several more
pricing strategies that were used in E-Vehicle.
Ø Value-based pricing-
With value-based pricing, you set your prices according to what consumers think
your e-vehicle is worth.
Ø Competitive pricing-
When you use a competitive pricing strategy, you're setting your prices based
on what the competition is charging. This can be a good strategy in the right
circumstances, such as a business just starting out, but it doesn't leave a lot
of room for growth.
Ø Price skimming-
If you set your prices as high as the market will possibly tolerate and then
lower them over time, you'll be using the price skimming strategy. The goal is
to skim the top off the market and the lower prices to reach everyone else.
With the right product it can work, but you should be very cautious using it.
Ø Cost-plus pricing-
This is one of the simplest pricing strategies. You just take the e-vehicle
production cost and add a certain percentage to it. While simple, it is less
than ideal for anything but physical products.
Ø Penetration pricing-
In highly competitive markets, it can be hard for new companies to get a
foothold. One way some companies attempt to push new products is by offering
prices that are much lower than the competition. This is penetration pricing.
While it may get you customers and decent sales volume, you'll need a lot of
them and you'll need them to be very loyal to stick around when the price
increases in the future.
Ø Economy pricing-
This strategy is popular in the commodity goods sector. The goal is to price a
product cheaper than the competition and make the money back with increased
volume.
Ø Dynamic pricing-
In some e-vehicle industries, you can get away with constantly changing prices
to match the current demand for the e-vehicle.
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