Page 181 - DMGT509_RURAL MARKETING

Rural Marketing

Notes

Notes The position in the rural market was totally different twenty years ago. At preset
there is a demand for products like TV, fans, oil engines, readymade garments, medicine,
etc. New products like toiletries, baby care products and consumer durables are now
getting good demand.

9.4 Finalization of Price

The following attributes are taken into consideration at the time of price finalization:

1. Price and quality perceptions of the target market customers. In many products, price and
quality do get interlinked and any lowering of price or keeping price lower than
competition has a definite effect on customer's mindset, as they believe lower price could
mean lesser quality product too.
2. Brand equity.
3. Advertising penetration and effect on the customers.

4. Price of other products of the firm in relative terms of their importance to the customers.
5. International farm produce prices could depend on the relative balance of payment situation
with a particular country, as well as currency exchange rates and tariffs. (It would be of
interest to the students to know that during the existence of the USSR, India's trade with it
was known as rupee trade, as both the countries were short of hard currency, the dollars.
Needless to add that the USSR had no need of our rupee and we had none of their Money,
it was in true sense a barter arrangement where each country could sell to the other some
useful but mostly useless items to the other country).
6. It could also be in two parts, one barter and the other could be cash payment. It can be said
that the firms need to have information on competition and the customer's psychology
before the price can be fixed correctly. As the markets are dynamic entities, pricing
mechanism also has to be kept in readiness for changes as per market needs and firms own
objectives.
As most consumer and several industrial products are sold through distribution channels, their
price must take in to account the margins to be offered to the channel members or their possible
mark-ups, in the event that they are given one price by the manufacturer and asked to add their
profits or mark-up on to the price. Hence the retail price could be made up of the following two
different offers as follows:

1. Technical bid giving the product's technical specifications, capabilities and conformance
to the specifications needed by the buyer.
2. Commercial bid giving the price and other terms of business.

The sealed bids are opened on a designated date, time and place in front of the bidders. First the
technical bids are seen and those not meeting with the desired specifications are excluded from
the tender.
Next, the commercial bids are opened and the buyer decides on its basis the firm/s on whom the
order is to be placed.

176 LOVELY PROFESSIONAL UNIVERSITY