3. how should a company adapt prices to meet varying circumstances and opportunities? (chapter 13)...

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

Pictures Sourced from:

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http://commons.wikimedia.org

www.theguardian.com

Fonts Sourced from:

www.fontsquirrel.com

Based on “Marketing Management: A South Asian Perspective”

By Kohler, Kelter, Koshy and Jha

Credits