PRICE

ADAPTATION
STRATEGIES
1. Geographical Pricing
It refers to pricing decisions related to
products intended for customers in
different locations. The cost of
shipping is a primary consideration
which led to the following strategies
namely (a)point-of-production pricing;
(b)uniform delivered pricing; (c) zone-
delivered pricing and (e) freight-
absorption pricing.
• Point of Production Pricing. The situation
where the seller quotes the selling price at
the point of production, and the buyer selects
the mode of transportation and pays all
freight costs.
• Under uniform delivered pricing. The seller
quotes to all buyers the same delivered price
regardless of their locations.
• Zone-delivered pricing. The seller sets prices
that are different from zone to zone.
• Freight Absorption pricing. The seller pays
for some of the freight charges in order to
penetrate more distant markets.
2. Price Discounts and Allowances

Discounts and allowances are price

modifications designed to reward
customers for early payment volume
purchase and off-season buying.
Discounts are reductions from the list price
that are given by sellers to buyers who
either give up some marketing function or to
provide the function themselves.
Allowances are reductions in price given to
final consumers, customers, or channel
members for doing some tasks or
accepting less service.
2. Price Discounts and Allowances
• Cash Discounts. These are reductions in price to
encourage buyers to pay their bills quickly.

• Quantity Discounts. These are reductions on unit

costs for a larger order.

• Functional or Trade Discounts. These are

reductions from the list price given by the
manufacturer to reward wholesalers and retailers
for marketing functions they will perform.

• Seasonal Discounts. These are price reductions

given to buyers who buy goods or services out of
season. It helps the manufacturer maintain
production even during seasons of low demand.
2. Price Discounts and Allowances

• Allowances. These are reductions

from list prices to buyers for
performing some activity.
Types of Allowances
1. Trade-in Allowance. This is a price reduction
given when a used product is part of the
payment on a new product.

2. Promotional Allowance. This is a price

reduction granted by a seller as payment for
promotional services performed by buyers.
3. Promotional Pricing
Promotional pricing refers to the temporary
reduction of prices of a company’s products. Price
reductions maybe in the form of:

A. Sale. The prices of the products are reduced for a

limited time.
B. Special event-pricing. Under this form, special prices
in certain seasons are made to draw in more
customers.
C. Cash Rebates. It is offered to customers to
encourage them to make purchases within a
specified time period.
D. Low-interest Financing. Involves low-interest
financing to customers.
E. Warranties and Service Contracts. It involves adding
a free warranty offer or service contract.
4. Discriminatory Pricing

Discriminatory pricing refers to

modifications of the basic price to
accommodate differences in
customers, products, and locations.
The company sells its products or
service at two more prices.
4. Discriminatory Pricing

Forms of Discriminatory Pricing

1. Customer Segment Pricing. These are different

prices for the same product or service are charged
for different customer groups.
2. Product Form Pricing. Different product versions
are priced differently without considering its costs.
3. Image Pricing. Identical products but with different
images are priced at two different levels.
4. Location Pricing. Different locations are priced
differently even if the cost of offering each
location is the same.
5. Time Pricing. Prices varied by season, day, or hour.
Thank you!