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Marketing Exam Study!

      • Functional discount(trade discount): offered by the seller to trade- channel members who perform certain functions such as selling, storing, and record keeping

      • Seasonal discount: price reduction to buyers who buy merchandise or services out of season

      • Allowance: promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturer’s products in some way

      • Trade-in allowances: price reductions given for turning in an old item when buying a new one

      • Promotional allowances: payments or price reductions to reward dealers for participating in advertising and sales support programs

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    Segmented Pricing

    • Selling a product or service at two or more prices, where the difference in prices is not based on differences in costs

    • Takes several forms

      • Customer-segment pricing: different customers pay different prices for same product or service, ex) adults/students/seniors

      • Product-form pricing: different versions of the product are priced differently but not according to differences in their costs

      • Location pricing: company charges different prices for different locations even though cost of offering at each location is the same

      • Time pricing: price varies by the season, month, day, and even hour

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      Psychological Pricing

      • A pricing approach that considers the psychology of prices and not simply the economics; the price is used to say something about the product

      • Reference prices: prices that buyers carry in the minds to refer to when they look at a given product, ex) sale prices vs. regular prices

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      Promotional pricing

      • Temporary pricing products below the list price, and sometimes below cost, to increase short-run sales

      • Stores will put in a few products as loss leaders – products priced below their cost to attract customers to the store in hope that they will buy other items at normal mark ups

      • Some manufacturers offer cash rebates to consumers who buy the product from dealers within a specified time

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      Geographical Pricing

      • Company must decide to price its products located in different parts of the country or world

      • How will shipping costs be paid?

      • FOB-origin pricing

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          Goods are placed free on board, and the shipping responsibility is on the customer, who pays the freight from the factory to destination, each customer picks up their own costs

      • Uniform-delivered pricing

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            Opposite of FOB pricing, company charges same price plus freight to all customers, regardless of their location

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            Freight charges is set at the average freight cost, everyone pays the same price no matter how close they are

      • Zone pricing

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