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  • Pyramid Profit Model

    Pyramid Profit Model

  • #2
    PYRAMID PROFIT MODEL

    It can be summed up as follows: an organization offers a scope of items inside a similar market to speak to all levels of buyers, from bargain to extravagance.
    To guarantee this benefit show works, an organization should first begin with a base level, "firewall" item. This item is sold as economically as would be prudent, and is additionally created as proficiently as could be allowed, so that no contender can undermine the cost. The organization then develops the pyramid offering diverse comparable items at various value focuses to various customer levels, finishing with the extravagance item at the highest point of the pyramid. The organization makes the most benefit at the highest point of the pyramid and less as it goes down.
    The market for an item should be sufficiently extensive so that potential purchasers traverse crosswise over various salary levels, all searching for various components out of a comparable item. An organization should likewise have expansive brand faithfulness and a huge percent of the piece of the pie.
    When I was considering this benefit display, it was clear to me that it is being utilized by an assortment of organizations in different ventures.
    Diverse sections of clients need distinctive levels of value/administration and have distinctive capacities to pay. Product offerings that guide well to various client sections can catch more benefit.
    A Pyramid Is A System Of Three Profit Tiers:
    • A Defensively Priced Bare-Bones Product To Keep Competition Out.
    • A Standard Product For Most People.
    • Deluxe Version To Get Maximum Profit From Those With A High Willingness To Pay.
    The clearest case I could consider is Nissan, offering distinctive brands of autos, Versa to Maxima to GTR, to various purchasers. You can likewise observe this model utilized only with PC and innovation organizations.
    Other Examples may be Motorola Phones Inc. which provide phones prices ranging from Moto E to Moto G to Moto X. which provide items from bargain price till luxury items.
    Last edited by rahul94; 04-05-2017, 03:43 PM.
    http://gph.is/1jZKy4a

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    • #3
      Pyramid Profit
      • In this model
      To ensure this profit model works, a company must first start with a base level, “firewall” product. This product is sold as cheaply as possible, and is also produced as efficiently as possible, so that no competitor can undercut the price. The company then builds up the pyramid offering different similar products at different price points to different consumer levels, ending with the luxury product at the top of the pyramid. The company makes the most profit at the top of the pyramid and less as it goes down.

      Last lyre help, build a firewall against competition and maintain good margins.
      Examples.
      1. Chocolates: - Chocolates Company offering different price (Rs. 5, 20, 50,150) product to different consumer’s level.
      2. Cinema hall ticket: - cinema hall is also use this model for offering different price to different consumer.
      3. Cars Company: - General Motors offering different brands of cars Chevy to Cadillac to different consumers.
      Attached Files

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      • #4
        Pyramid Profit
        • Single product in different tier product strategy that encompassed a core product, a standardized (but high quality and efficiently produced) product as a low-end competitive firewall to block new entrants from the market.
        • Each should satisfy from niche to each level of customer and requires a specific understanding of all customer, both current and potential.

        [IMG]file:///C:%5CUsers%5CAbhi%5CAppData%5CLocal%5CTemp%5Cmsoht mlclip1%5C01%5Cclip_image001.jpg[/IMG]
        Examples
        1 Samsung it has created a firewall from their low priced product and also have high end products.
        2 Cadbury is also one business which have this models they had created a firewall from Dairymilk and have high product like Silk.
        Attached Files

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        • #5
          Pyramid Profit
          To ensure this profit model works, a company must first start with a base level, “firewall” product. This product is sold as cheaply as possible, and is also produced as efficiently as possible, so that no competitor can undercut the price. The company then builds up the pyramid offering different similar products at different price points to different consumer levels, ending with the luxury product at the top of the pyramid. The company makes the most profit at the top of the pyramid and less as it goes down. The market for a product must be large enough so that potential buyers span across different income levels, all looking for different features out of a similar product. A company must also have large brand loyalty and a large percent of the market share.


          [IMG]file:///C:%5CUsers%5CABHISH~1%5CAppData%5CLocal%5CTemp%5Cm sohtmlclip1%5C01%5Cclip_image001.png[/IMG]
          1. Samsung has created the firewall from their lower prices products and they also have higher prices products.
          2. Chocolate company like 5 star, dairy milk, perk etc. they have their different prices product at different consumer’s levels.

          Attached Files

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          • #6
            Pyramid Profit Model

            Company caters to different levels of price sensitivity. Offer a range of services from low price / high volume to higher price and lower volume.


            The base of the pyramid consists of low-priced high-volume products, while the apex is made up of high-priced low-volume products. The bulk of profitability is concentrated at the top of the product pyramid, but the base plays a strategic role often through a "firewall" brand in protecting the profitability at the top.
            A true pyramid is a system in which the lower-priced products are manufactured and sold with so much efficiency that it's virtually impossible for a competitor to steal market share by under-pricing you and that’s form a firewall.

            For Example
            Witness the history of the U.S. automotive market from 1965 to 1995. Japanese competitors (Honda, Toyota, Nissan) first occupied the base with cars designed to be profitable, even at low price levels. They then moved up (Honda’s Acura, Toyota’s Lexus, Nissan’s Infiniti) to where the higher profits were.
            Other examples: Nokia phones, Swatch. etc.


            Companies where pyramid profit doesn’t work
            1 - Premium gas = bad pyramid because there's no reason to buy the top one.
            2 - American Express Platinum card

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            • #7
              Pyramid Profit Model

              After customer solution profit, next theory is Pyramid profit and it says that for every different class of customer company make different product at different prices i.e. product range and cost for lower class to upper class. To compete with other companies, they have to make a product with all the feature, minimum margin and cheaper for consumer in such a way that our competitors can’t make a product, that is known as firewall.

              Examples

              TATA Motors- They have products range from TATA nano for lower class to TATA safari, jaguar and rang rovar for upper or high class. They have different segments for different customers. TATA nano is a firewall product as the cheapest car with all the feature in it.

              Samsung Mobiles- Mobile starts from lowest price like Rs. 1200 and ends with Rs. 60000 and had variety of products with different prices between them. The cheapest phone is the firewall for Samsung.

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              • #8
                Pyramid Profit Theory:-
                In this theory a company must start with a base level “firewall”. This product sold as cheaply as possible as so competitors can’t undercut the price. In this time company builds up the pyramid offering different similar products at different price points on the basis of consumer levels. End of the luxury products at the top of the pyramid. Company earns maximum profit at the top of the pyramid and minimum as its goes down.
                We can say “Different products for different market segments.”

                Examples of pyramid profit
                1. Samsung mobiles:- Samsung provides all the types of mobiles according to the customers affordable capacity. It means company makes cheapest to highest prices mobiles.
                2. Tata Motors:-Tata Company’s moto is everyone can buy a car so company makes all type of car. Example is everyone can buy Tata Nano, Middle class people can buy Tata Tiago and people who wants luxuries car then they buy Tata Hexa and Tata Aria.
                3. Max Apparel: - Max provides all the types of apparel according to the customers need.
                4. Ray ban Sunglasses:- Ray ban’s sunglasses starting cost is Rs.999 which is affordable for everyone. Cost is increasing to their consumer’s level and needs.
                5. Fast Track Watches:- Fast Track company makes watches according to consumer level. Its starting cost is Rs.499.

                Pyramid profit doesn’t work in below products and companies:-
                1. Apple Inc.:- Apple company’s provide iphones but low class and most of middle class family can’t afford iphones because of its starting cost is Rs.20000. In this situation competitor easily undercut the price.
                2. Marks & Spencer Apparel: - Its starting cost is Rs.2000 for one t-shirt so everyone can’t afford this company’s apparel.

                Attached Files

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                • #9
                  PYRAMID PROFIT MODEL

                  Pyramid Profit Model focuses on creating a firewall of defensive product at the bottom of the pyramid which may not be that profitable for your business but it prevents other companies from establishing a connection with your customers. As we move up the pyramid, profit margin on products start increasing and the most powerful profit generator product is placed at the top of the pyramid.

                  Few companies which use this model are:-

                  Hero Moto Corp uses this model by placing two wheeler models like HF Dawn, CD Deluxe at the bottom which the entry level bike from them and Karizma ZMR at the top.

                  McDonalds has their McAloo Tikki Burger at the bottom which doesn’t yield any profit for the company but when you buy a whole meal, they earn profit. Double McSpicy Chicken tops the pyramid.

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                  • #10
                    PYRAMID PROFIT MODEL

                    In this model the company has defined component or product.it can be arranged in the shape of pyramid.where the bottom part it is called firewall product.which has lowest price and profit.it can be said that fire wall product it defensive product for the company as you go up the profit margin of the product will increase.And top of the pyramid the product has the highest profit.
                    For example- Samsung mobile The lowest mobile like Samsung galaxy j 3 its the defensive product and model like Samsung galaxy S 8 are the top most product and earning the highest profit.
                    And other example Sony Bravia this provide T.V range from 20000 to 2 Lakh. And the 20000 t.v are the fire wall product and 2 lakh are the highest profit margin.

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                    • #11
                      PYRAMID PROFIT
                      The pyramid profit theory is second theory of profit. In this the products are of different types and price is different as per different class of people that means from lower class to upper class. In the initial the competition are very high ,they have to make that type of product which have low price with good quality as compared to our competitors, this is known as firewall. Firewall is price that no other companies can give products in this price with the same features.

                      Example : BISLERI who gave good quality product with reasonable prices as per their competitors .
                      TATA SALT they make their product qualitative and price efficient, they have lots of competitors in market.
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                      • #12
                        Pyramid profit model
                        Pyramid profit model is a very useful model for making profit and connect more customer and keep connect customer in an organization. According to pyramid profit model if any organization is providing a high quality product in high quantity and charging according to the product so the cost of the product can be high for middle class person so the middle class family can’t afford this product and they have to go any another brand. And competitor can take advents of this situation so according to pyramid profit model the company should provide the same product in small quantity on cheaper rate so the middle class people can buy it and they don’t need go for any another brand. According to this model company may face some loss in initial stage but it will be profitable for long term. They have to make a product with all the feature, minimum margin and cheaper for consumer in such a way that our competitors can’t make a product that is known as fire wall.

                        Example:-
                        1. Samsung mobile provides all types of mobile according to customer affordable prices and satisfaction.
                        2. Tata motors have nano for the lower class people and rang rover for the upper class people. These are the different segment of different class of people.

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                        • #13
                          PYRAMID PROFIT MODEL
                          This model is all about the making profit threw the products at more than one price point. They target all type of customers .The bulk of profitability is concentrated at the top of the product pyramid, but the base plays a strategic role often through a "firewall" brand in protecting the profitability at the top.
                          A true pyramid is a system in which the lower-priced products are manufactured and sold with so much efficiency that it's virtually impossible for a competitor to steal market share by under-pricing you and that’s form a firewall. The customers themselves form a hierarchy, with different expectations and different attitudes toward price.
                          For example-
                          SBI- all type of account and customer they have. 0 balance saving account to multiple balance current accounts.
                          DOMINOS- they gave all type of pizza starting from 49 pizza mania
                          Attached Files

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                          • #14
                            Pyramid Profit Theory:-

                            In this theory a company must start with a base level “firewall”. This product sold as cheaply as possible as so competitors can’t under cut the price. In this time company builds up the pyramid offering different similar products at different price points on the basis of consumer levels. End of the luxury products at the top of the pyramid. Company earns maximum profit at the top of the pyramid and minimum as its goes down. In this the products are of different types and price is different as per different class of people that means from lower class to upper class. In the initial the competition are very high, they have to make that type of product which have low price with good quality as compared to our competitors The market for a product must be large enough so that potential buyers span across different income levels.



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                            • #15
                              Pyramid profit model focuses on multi brands and multiple markets. This model depicts sell lower and middle quality goods and services at a cost or loss and then focus on selling premium in the same category at a significant margin which will cover the losses incurred by other brands. In a pyramid profit model the customer need is kept in mind and different product of different price is manufactured i.e. a firewall of defensive product at the end of the pyramid and powerful profit generation at the top is created to stop the competitors. Thus it is a system in which the lower priced products are manufactured and sold with so much efficiency that it’s virtually impossible for the competitors to steal the market share by under pricing.
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