Price Adjustment Strategies

Marketers adjust prices to account for customer differences and changing market conditions.

1. Discount and Allowance Pricing

Discounts: Direct price reductions offered for a specific reason.
- Cash Discount: Given for prompt payments (e.g., 2% off for early B2B payments).
- Quantity Discount: For bulk purchases.
- Trade Discount: For wholesalers, retailers, and dealers.
- Seasonal Discount: Given for off-season purchases.
Allowances: Promotional incentives provided by manufacturers to retailers.
- Trade-in Allowance: Price reduction when exchanging an old product for a new one.
- Promotional Allowance: Given to dealers for participating in advertising and promotional efforts.

Selling the same product at different prices without cost differences.

Customer-Segment Pricing: Different prices for different customer groups.
- E.g., Student discounts, senior citizen rates, defense personnel discounts.
Product-Form Pricing: Different versions of a product priced differently.
- E.g., Economy vs. Business Class airline tickets.
Location-Based Pricing: Prices vary by location.
- E.g., Out-of-state students pay higher tuition fees.
Time-Based Pricing: Prices change based on time factors.
- E.g., Happy hours at restaurants, peak-season hotel rates.

Note: Prices should reflect real value differences to avoid customer dissatisfaction.

Using pricing strategies that influence how customers perceive value.

Price as a Quality Signal: When customers can't judge quality, they rely on price.
Reference Prices: Prices customers expect based on past experience or comparisons.
Tactics Used by Sellers:
- Sale Signs & Price Matching (e.g., "Best Price Guarantee")
- Loss-Leader Pricing (Selling some items below cost to attract buyers).
- Bata Pricing: Prices like ₹99.99 instead of ₹100 to seem cheaper.
- Odd-Even Pricing:
  - Odd prices (₹499) suggest a bargain.
  - Even prices (₹1,50,000) suggest luxury.

Temporarily reducing prices to boost short-term sales.

Common Methods:
- Flash Sales & Limited-Time Offers: Creates urgency.
- Special Event Pricing: Discounts during festivals or events.
- Low-Interest Financing, Extended Warranties: Adds value without reducing list price.
Risks of Promotional Pricing:
- Frequent discounts can damage brand perception.
- Customers may wait for sales instead of buying at regular prices.

Setting prices based on customer location.

FOB Origin Pricing: Customer pays shipping from factory.
Uniform-Delivered Pricing: Same price for all locations, including shipping.
Zone Pricing: Different prices based on regions or zones.
Basing-Point Pricing: Freight cost calculated from a specific city.
Freight-Absorption Pricing: Seller covers some or all shipping costs.

Continuously adjusting prices based on market demand.

Examples:
- Uber surge pricing during peak hours.
- Airline ticket pricing fluctuating based on demand.
Personalized Pricing: Adjusting prices based on individual customer behavior.
- Example: Online stores offering special discounts based on past purchases.

Note: If used unfairly, dynamic pricing can hurt customer trust.

Companies set different prices in different countries based on:

Higher prices may result from higher operational costs, import duties, and logistical expenses.