3. how should a company adapt prices to meet varying circumstances and opportunities? (chapter 13)...
TRANSCRIPT
How should a company adapt prices to meet varying circumstances and
opportunities?
By,
Anurag Kar
B.Tech. Student
Department of E and ECE
IIT Kharagpur
Based on Chapter 3: Developing Pricing
Strategies and Programs
Of
Marketing Management: A South Asian
Perspective
By Kotler, Keller, Koshy and Jha
Geographical Pricing
In Geographical Pricing,
the company decides how to price
its products to different
customers in different locations
and countries.
C o u n t e r t r a d e
A practice in which buyers offer
other items in payment instead
of or along with money.
Forms of Countertrade
BarterGoods are exchanged directly
with no money and no third
party involvement.
Forms of Countertrade
Compensation
Deal
Some percentage of the
payment is done in cash and the
rest in products.
Forms of Countertrade
Buyback
Arrangement
Seller accepts as partial payment
products manufactured with the
supplied equipment (a plant or
technology).
Forms of CountertradeOffset
Seller receives full payment in
cash but agrees to spend a
substantial amount in that
country in a time period.
Forms of Countertrade
Barter
Compensation
Deal
Buyback
Arrangement
Offset
Price Discounts and Allowances
Companies adjust their list price and give
discounts and allowances for…
1. Early Payment
2. Volume Purchases
3. Off Season Buying
PriceDiscounts
And Allowances
Discount
Quantity
Discount
Functional
DiscountSeasonal
Discount
Allowance
Discounts should be used sparingly, because
excessive discounts undermine the value
perceptions of the product and give an impression
that the company’s price list is ‘soft’.
Promotional Pricing
T y p e s o f P r o m o t i o n a l P r i c i n g
Loss-Leader
PricingSpecial Event
Pricing
Psychological
Discounting
Low-Interest
FinancingCash RebatesLonger Payment
Terms
Special Customer
Pricing
Warranties And
Service Contracts
Loss-Leader Pricing
Dropping the prices on well - known
brands by supermarkets to simulate
additional store traffic.
Special Event Pricing
Establishing special prices in certain
seasons or festivals to draw more
customers.
Eg. Special offers during Diwali.
Special Customer Pricing
Offering special prices exclusively to
certain customers.
Eg. The SBI Platinum Credit Card
Cash Rebates
Offering a cash refund (rebate) to
encourage purchase of products within a
specified time period.
Low - Interest Financing
Offering low interest financing instead
of cutting prices.
Eg. Automakers have used no interest
financing to attract customers.
Longer Payment Terms
Offering longer payment terms on loans
so that the monthly payments are
lowered.
Warranties and Service Contracts
Adding a free or low cost warranty or
service contract to promote sales.
Psychological Discounting
Setting an artificially high price and then
offering the product at substantial
savings.
Differentiated Pricing
Differentiated Pricing is the practice of
adjusting the basic price to accommodate
differences in customers, products,
locations, and so on.
PRICE DISCRIMINATIONis when a company sells a product or
service at two or more prices that do not
reflect a proportional difference in costs.
T y p e s o f P r i c eD i s c r i m i n a t i o n
Customer segment
PricingProduct Form
PricingTime
Pricing
Channel
Pricing
Image PricingLocation Pricing
Customer Pricing
Different customers pay different prices
for the same product or service.
Product – form Pricing
Different versions of the same product
are priced differently but not
proportional to their costs.
Image Pricing
Pricing the same product at two
different levels based on image
differences.
Channel Pricing
Different pricing based on through which
channel the product is bought.
Location Pricing
Different prices at different locations
even though the cost of offering it is the
same everywhere.
Time Pricing
Prices which vary by season, day or hour.
Eg. Happy hours in restaurants.
Recap
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Based on “Marketing Management: A South Asian Perspective”
By Kohler, Kelter, Koshy and Jha
Credits