Parle g: marketing assignment

This method of Pricing has the following advantages:- ; It can create goodwill among the early adopters segment. This can create more trade wrought word of mouth. ; It creates cost control and cost reduction pressures from the start, leading to greater efficiency. ; It discourages the entry of competitors. Low prices act as a barrier to entry (Porter 5 forces analysis). ; It can create high stock turnover throughout the distribution channel. This can create critically important enthusiasm and support in the channel.

The major disadvantage of Price Penetration is that it establishes long term price expectations on the part of the consumers and hence companies find it difficult to raise prices later in the years to come. Studies have shown that switchers (bargain hunters) are attracted by such pricing strategies and that is the reason why Parole G witnessed a dip in sales after it went ahead with a price increase. We can further say that the huge customer base that Parole G has garnered are extremely price sensitive individuals and will switch once prices rise.

This SKU caters to the largest segment of consumers. As mentioned before, the price of the product cannot be changed due to high price elasticity of demand, therefore to mitigate the fall in margin, we propose a decrease in the grammar of this SKU from 82. G to egg. This reduction of 2. 5 g would lead to a reduction in the costs of 3. 03% per unit of INNER 4 SKI-J. Since the margins are a direct function of the cost and this particular SKU comprises of a large percentage of the business, this reduction in grams would increase the margins considerably. 2.

Target the socioeconomic classes of RI, RE, RE and RE Rationale: This segment consists of the rural population of 145. 7 million households out of which 68. 3 million households are current consumers of the brand. Thus 53. 1% of this segment is still untapped which we believe is a tremendous potential for the company. This segment, also referred to as the BOP, is primarily attracted by the low prices and therefore the smaller SKU s. If we can increase our customer base in this segment, the decrease in cost in the SKU by reduction in grammar would be able to overcome the fall in margins.