Aquino. Caballero. Dulay. Feliciano. Olondriz. SusonPRICING OBJECTIVES AND POLICIESStrategy planning for price

Pricing objectives

Price flexibility policiesONE PRICE POLICYsame price to all customers who purchase products under essentially the same conditions and quantitiesFLEXIBLE PRICINGthe same product and quantities to different customers at different prices

Price level policies

Discount pricing

Discount policiesDISCOUNTSreductions from list price that are given by a seller to a buyer who either gives up some marketing function or provides the function himselfQuantity DiscountsCumulative quantity discounts encourage repeat purchases and relationshipsNoncumulative encourage large ordersSeasonal Discounts smooth out demandCash Discounts encourage early paymentTrade Discounts go to middlemen

Geographic pricing policiesFREE ON BOARDat some places (e.g. FOB Sellers Factory, FOB Delivered)ZONE PRICING an average freight charge to all buyers within specific geographic areasUNIFORM DELIVERED PRICINGthe same (average) freight charge to all buyersFREIGHT ABSORPTION PRICINGseller pays freight cost so delivered price matches competition

IMPACT ON CUSTOMER VALUECustomer value considers total costs and benefitsCosts and benefits are impacted not only by list price but by: discounts, allowances, delivery terms and geographic pricing policies, sales and deals and pricing flexibilityValue pricing leads to superior customer valueValue pricing is setting a fair price level for a marketing mix that really gives the target market superior customer value

VALUE PRICING

Price setting in the business world