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Pricing Strategy ITC Foods Business Division (Staples)
The FMCG & RETAIL Pricing Strategy
UNDERSTANDING THE PROCESS
FMCG Pricing Strategy is now a critical element of the management mix. Old school management responsibilities of Sales owning the trade spend budget and customer negotiations with marketing owning the Recommend Retail Price do not work in today's information driven age.
Retail sales volume is now 80% controlled by 2-3 chains with a scattering of independent operators making up the rest of the volume. This concentration means the negotiations favour the retailer with the supplier handing over margin via the mechanism of trading terms and via the demand for increased promotional frequencies and deep price discounts on key branded lines.
The challenge for Trade Marketing, Category Management as well as Sales and Marketing is to develop a pricing system that can be customized to reflect your business needs but utilize the power of a structured and proven pricing management system.
The Basic Concept used by ITC is:
“PRICE IS SOMETHING WHICH CUSTOMER IS READY TO PAY FOR YOUR PRODUCT”
Hence it is a majority function of
- Consumers purchasing Power.
- Market condition created by the Competitor in terms of the Price.
PRICING STRATEGY
Pricing is an important strategic issue because it is related to product positioning. Furthermore, pricing affects other marketing mix element ...