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1. Geographical Pricing Barter: the direct exchange of goods with no money and no

third party involved Compensation deal: the seller receives some percentage of

the payment in cash and the rest in products Buyback arrangement: the seller sell a plant equipment or

technology to another country and agrees to accept as partial payment products manufactured with the supplied equipment

Offset: the seller receives full payment in cash but agrees to spend a substantial amount of the money in that country within a stated time period.

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2. Price Discounts and Allowances

Quantity discount:Quantity discount: The more you buy, the cheaper it becomes-- cumulative and non-cumulative.Trade discountsTrade discounts:: Reductions from list for functions performed-- storage, promotion.Cash discountCash discount:: A deduction granted to buyers for paying their bills within a specified period of time, (after first deducting trade and quantity discounts from the base price)

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Functional discount: discount offered by a manufacturer to trade-channel members if they will perform certain functions.Seasonal discount: a price reduction to those who buy out of season.Allowance: an extra payment designed to gain reseller participation in special programs.

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3. Promotional Pricing• Loss-leader pricing: supermarkets and department stores

often drop the price on well known brands to stimulate additional store traffic

• Special-event pricing: sellers well establish special pricing in certain seasons to draw in more customers

• Cash rebates: companies offer cash rebates to encourage purchase of the manufacturers products within a specified time period

• Low-interest financing: the company can offer customers low-interest financing

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• Longer payment terms: sellers especially mortgage banks and auto companies stretch loans over longer periods and thus lower the monthly payment

• Warranties and service contracts: companies can promote sales by adding a free or low cost warranty or service contract

• Psychological discounting: this strategy involves setting an artificially high price and then offering the product at substantial savings

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4. Discriminatory Pricing

• Price discrimination works when:– Market segments show different intensities of demand– Consumers in lower-price segments can not resell to higher-

price segments– Competitors can not undersell the firm in higher-price

segments– Cost of segmenting and policing the market does not

exceed extra revenue

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Discriminatory Pricing Tactics:– Customer segment pricing– Product-form pricing– Image pricing– Channel pricing– Location pricing– Time pricing

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5. Discriminatory Pricing There are six situations involving product mix pricing:1) Product line pricing: Companies normally develop product lines rather than

single products and introduce price steps. 2) Optional feature pricing:Many companies offer optional products, features and

service along with their main product.3) Captive product pricing:Some products require the use of ancillary or captive

products.

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4) Two part pricing product:Service firms often engage in two-part pricing consisting of

affixed fee plus variable usage fee.

5) By-product pricing:The production of certain goods-meat petroleum products

often results in by-products.

6) Product bundling:Sellers often bundle products and features.

Thank You.Thank You.