 second semester learners of our MBA program. In your second semester you are having a course on marketing management and in that course unit 8 is all about pricing. So in these three small videos of 10 minutes duration each about 10 minutes duration we shall discuss the pricing unit and in these small videos what I have done the learning objectives which have been given at the beginning of your self-study material, self-learning material. I have taken up those six learning objectives and have divided those six learning objectives into three parts and in first part I shall take up the first two learning objectives. The first learning objective is to understand the concept of price and then to understand the role of consumer psychology in pricing. So in this small video of about 10 minutes duration we shall discuss the concept of price. Then we shall also discuss, we shall also try to understand the role of consumer psychology in pricing. Pricing basically will be done by the marketer and for the consumer it is cost. The marketer will try to earn the dividend through pricing mechanism. So pricing is very important as you all know that the marketer is basically concerned about the four piece of marketing the what we call the marketing mix product, price, place, promotion and out of these four marketing mix elements each and every one of these elements is very very important. Product is important so is price. Distribution is important so is promotion. If a product is not priced well the product will not sell. If the product is not distributed well if the product is not communicated the market will not come to know about the product though it can be good product though it can be suitably priced. So each and every element of the marketing is important. But still out of these four mix elements price is one of the elements which basically helps the organization the marketer in earning the revenue. Product development requires cost. Distribution coverage requires lots of cost transportation logistics warehousing retailer distribution discount wholesaler discount it involves lots of cost. Promotion, advertising has cost sales promotion has cost publicity has cost all the marketing mix elements have cost. But price is the only mix element which helps the organization to generate the revenue. From that perspective pricing is very very important and price is unique in the sense that it is the easiest element of the marketing mix to adjust to the senses in the marketing environment. Product you see development of the product thinking about idea then crystallizing the idea developing the prototype developing the concept then developing the brand image launching the product in the market takes lots of time and then after launching the product in the market you cannot think of withdrawing it you have to sustain it. Likewise advertisement also designing an advertisement making the advertisement feel releasing it it's a time consuming affair. But product distribution distribution appointing a wholesaler then continuing the relationship with the wholesaler I cannot think of withdrawing the wholesaler all of a sudden in that case the market will suffer. So each of these elements requires lots of time elements but price is the only one element which the marketer has and the advantage of keeping it changing suppose today we can think about giving say 5% discount tomorrow we can think about withdrawing it tomorrow we can think about offering a say buyer relevance all suppose something like that so basically in case of pricing the marketer is a bit in an advantageous position to adjust with the senses in the marketing environment. But other elements like say product features or say marketing communication or the distribution channel etc. it requires some time to adjust reasonably longer time to adjust and if we discuss the concept of price further we shall also try to understand some other aspects like say price can be defined as the amount of money which is serves for a protocol service say one particular thing suppose this mobile handset this cost there will be 12,000 like that so it's the value for money now value for money whether it is monetary value or whether the non-monetary value there are some non-monetary aspects which are monetized suppose this is a brand of say Nokia Nokia has a brand name so that also has a cost so that brand that branding cost also gets associated with that monetary cost so the consumers that psychology consumers among himself or herself with the consumer society there are lots of processing so it's not just only monetary value monetary value also involves some other non-monetary factors which value is normally monetized by the consumer so while consuming the product or service so broadly speaking price is a sum of all the values for having a particular product suppose this particular product cost says will be 12,000 this I can procure online without having or I can go to suppose pan bazaar so going to pan bazaar searching for different shops then deciding about this it has some cost it has got time cost it has got money cost it has got energy cost it has got some psychic cost also so psychic cost in the sense of suppose I buy the item and then I feel that the dissonance about this so I can develop some kind of disagreement dissatisfaction so that also has a cost but suppose this is a Nokia brand it's a good quality product I know about this so in that case that psychic cost is minimized so there may not be any psychic cost I just take an issue and say this will be good product so I may not have any kind of this this on edge I may not have any kind of disagreement or dissatisfaction so price it's not only service only to look this way it's not like that it has got lot many other aspects also moreover price is something which communicates the market about the company's proposed value suppose one particular ballpoint pen is price at rupees to automatically the consumer will develop an image that this is a low price for that this is a low cost for that so this is a low view for that its quality will not be that good suppose one ballpoint pen the cost is supposed to be 500 the consumer will automatically and that is suppose package where in a very beautiful package it has been offered in the market the color is good writing is good the consumers will definitely form an image perception that price perception that is that is the communication that also plays a very important role in case of pressing so consumer psychology plays a very important role as far as pricing is concerned before processing anything consumers often actively process price related information with their existing knowledge of price from their earlier experiences earlier they will read the price with their earlier experience last time I bought this kind of thing at this price so how can this price be relevant in today's context moreover consumers go for a search search with their friends neighbors relatives or maybe colleagues their primary reference groups secondary reference groups and they will collect different advertisement they will see in today's context online purchasing the consumers will go for make an online source will just make a price comparison and then ultimately develop a price perception and that price perception plays a very important role as far as paying the price for a product how much cost will have to be incurred forever in the benefits of a product so pricing for the perspective is very very important so consumer psychology for many suppose the product is of varying high quality high price so definitely some premium image consumers will form that image and several studies have studied the relationship between high price and product quality so moreover that is in consonance and that needs to be established by the previous information consumers are getting some consistently good benefits product features product benefits by a very high prices consumers will automatically develop any impression like that so that consumers process decision is highly governed guided by the perceived price of the product so if the so in that context there is a two concept of floor price and sharing price floor price is something uses at a low level and this is something that consumers will think that if something is priced below the floor price consumers will think that this is a very low quality product inferior product and if it is suppose price above the ceiling price in terms of the affordability of the consumer the consumers will withdraw that this is beyond me I will not be able to sustain so it gives a range and between that range the consumers will decide which one to buy which one not to buy so consumers will set the limit so this is not something that I will buy only the item at 600 so consumers will fix a mind that I will buy a product say 500 to 700 so I may buy a product at 510 rupees or may I think about buying a product at 690 rupees also whatsoever so these are the things psychological aspects which influence by pricing decisions and they are the important things that why do consumers see prices like this it varies from consumer to consumer there are some consumers who are very highly savvy and there are some consumers who are very highly bargain seekers and they would like to go for bargaining and many times they go for reference checking checking with their families members checking with their close colleagues or the primary group members and say and the marketers will have to take privileges of the specters that's why you'll find the supermarkets departmental stores etc. they will store the products in different ranges suppose these are the products suppose the server say these are the products which are there to be 350 other there will be some other rats which will be at 750 rupees and could be in that same floor 350 rupees 750 rupees in the upstairs in another floor there will be the premium ranges with added features so the marketers will have to think about the psychological aspects of buying and accordingly they will have to make their own display arrangements so these are the different aspects which are involved with consumer psychology and pricing so these are the basic things which we have discussed in unit 1 we shall continue our discussion of unit 8 in our next two videos thank you