Price Adjustment Strategies
His price adjustment strategies relate to all the strategies implemented by an organization that
takes into account the differences between customers and rapidly changing. The price
adjustment strategies are: geographical pricing, psychological prices, segmented prices,
promotional prices, international prices, supply and pricing of allowances. The explanation of
these strategies is as follows:
Discount and Allowance Pricing
Discount
A straight reduction in price on purchase during a stated period of time or on purchasing
in large quantity
Allowances
Allowances are the price reduction given for turning in old item when buying a new one.
Segmented pricing
Some of the major forms of price fixing
are targeted customer segment, the shape
of the product price, location, etc. Low
price pricing segment of customers, firms
charge different prices to different
customer
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Psychological pricing
Many people judge the quality of the
commodity price for taking a higher price
as a sign of good quality. Sometimes
customers do not have information on
actual prices of products as judging the
quality of the product by its price. This
type of behavior requires sellers to
increase prices of their products despite
the fact that real prices are low.
There is a little concept of reference price
which can be define as
The cost that consumers anticipate paying or consider reasonable to pay for a particular
good or service. The marketing department of a business will often attempt to assess the
reference price for each of the products or services they are promoting in order to set pricing
levels appropriately to achieve their marketing goals.
Promotional Pricing
The act of offering a lower price
temporarily in order to enhance the
effectiveness of product sales efforts to
cost sensitive consumers. For example,
many businesses will offer promotional
pricing as a sales incentive when
initially launching a particular product line to potential consumers.
Geographical Pricing
A company also must decide how to price its products for customers located in different
parts of of the country or world.
Should the company risk losing the business of more distant customers by charging
them higher prices to cover the higher shipping costs?
Or the company charge all customers the same prices regardless of location?
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Examples
We will look at five Geographical Pricing strategies for the following hypothetical situations:
FOB-origin Pricing
Uniform-delivered Pricing
Zone Pricing
Basing-point Pricing
Freight-absorption Pricing
FOB-origin Pricing
A geographical pricing strategy in which
goods are placed free on board a carrier.
At that point the title and responsibility
passes to the customer.
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Uniform-delivered Pricing
A geographical pricing strategy in which:
• company charges the same price
• plus freight to all customers,
• Regardless of location.
Zone Pricing
A geographical pricing strategy in which:
• the company sets up two or more zones
• customers within a zone pay a single total price.
(more distant the zone, the higher the prices)
Basing-point Pricing
A geographical pricing strategy in which a seller:
• selects a city as “basing point”
• charges all customers the freight cost
(associated to the customer location regardless of the goods’
shipment city)
Freight-absorption Pricing
A geographical pricing strategy in which the seller
absorbs:
• all of the actual freight or
• part of the actual freight charge
as an incentive to attract business in competitive markets.
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Dynamic Pricing
Dynamic pricing is when prices are adjusted continually to:
• meet the characteristics and
• needs of individual customers and situations.
It offers many advantages for marketers. Pricess are changing for specific items on a
day-by-day or even hour-by-hour basis.
Dynamic pricing makes sense in many contexts, it adjusts prices according to
market forces, or it often works to the benefitsof the customers.
Examples
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International Pricing
International pricing is when prices are set in a specific
country based on country-specific factors.
– Economic conditions
– Competitive conditions
– Laws and regulations
– Infrastructure
– Company marketing objectives
Examples
Conclusion
A simple statement will conclude the overall presentation:
Treating customers fairly and making certain that they fully
understand prices and pricing terms is an important part of
building strong and lasting customer relationships.
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