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How should a company adapt prices to meet varying circumstances and
opportunities?
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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
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Geographical Pricing
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In Geographical Pricing,
the company decides how to price
its products to different
customers in different locations
and countries.
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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.
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Forms of Countertrade
BarterGoods are exchanged directly
with no money and no third
party involvement.
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Forms of Countertrade
Compensation
Deal
Some percentage of the
payment is done in cash and the
rest in products.
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Forms of Countertrade
Buyback
Arrangement
Seller accepts as partial payment
products manufactured with the
supplied equipment (a plant or
technology).
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Forms of CountertradeOffset
Seller receives full payment in
cash but agrees to spend a
substantial amount in that
country in a time period.
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Forms of Countertrade
Barter
Compensation
Deal
Buyback
Arrangement
Offset
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Price Discounts and Allowances
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Companies adjust their list price and give
discounts and allowances for…
1. Early Payment
2. Volume Purchases
3. Off Season Buying
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PriceDiscounts
And Allowances
Discount
Quantity
Discount
Functional
DiscountSeasonal
Discount
Allowance
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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’.
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Promotional Pricing
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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
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Loss-Leader Pricing
Dropping the prices on well - known
brands by supermarkets to simulate
additional store traffic.
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Special Event Pricing
Establishing special prices in certain
seasons or festivals to draw more
customers.
Eg. Special offers during Diwali.
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Special Customer Pricing
Offering special prices exclusively to
certain customers.
Eg. The SBI Platinum Credit Card
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Cash Rebates
Offering a cash refund (rebate) to
encourage purchase of products within a
specified time period.
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Low - Interest Financing
Offering low interest financing instead
of cutting prices.
Eg. Automakers have used no interest
financing to attract customers.
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Longer Payment Terms
Offering longer payment terms on loans
so that the monthly payments are
lowered.
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Warranties and Service Contracts
Adding a free or low cost warranty or
service contract to promote sales.
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Psychological Discounting
Setting an artificially high price and then
offering the product at substantial
savings.
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Differentiated Pricing
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Differentiated Pricing is the practice of
adjusting the basic price to accommodate
differences in customers, products,
locations, and so on.
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PRICE DISCRIMINATIONis when a company sells a product or
service at two or more prices that do not
reflect a proportional difference in costs.
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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
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Customer Pricing
Different customers pay different prices
for the same product or service.
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Product – form Pricing
Different versions of the same product
are priced differently but not
proportional to their costs.
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Image Pricing
Pricing the same product at two
different levels based on image
differences.
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Channel Pricing
Different pricing based on through which
channel the product is bought.
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Location Pricing
Different prices at different locations
even though the cost of offering it is the
same everywhere.
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Time Pricing
Prices which vary by season, day or hour.
Eg. Happy hours in restaurants.
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Recap
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Pictures Sourced from:
www.flickr.com
www.pinterest.com
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