Topic

PRICING – BASED ON
DISTRIBUTION
Pricing based on distribution

 Companies have to take two distribution aspects into consideration while pricing there
products
1. Consumers and channel members are widely scattered requiring geographical pricing
policy.
2. Channel members need motivetion to actively participate in sales promotion . It
necessitates theemployment of discount pricing.
A). Method of geographic pricing

1. FOB-Factory pricing-origin pricing

A geographical pricing stratergy in which the goods are placed free
on a board a carrier . The customer pays the freight from the fact-
ory to the destination.
2. Uniform delivered pricing
A geographical pricing stratergy in which the company charges the
same price plus freight to all customers, regardless of their locati-
on.
Method Of geographic pricing

3. Zone pricing
A geographic pricing stratergy in which in which company sets up
two or more zones . All cutomers within a zone pay the same total
price ,the more distant the zone ,the higher the price.
4. Base-point pricing
A pricing method in which customers are charged freight cost from
a base point,the base point may be chosen arbitrarily,but the locat-
of one of the company’s manufacturing plants is commonly used.
 B. Standard types of price discounts

DISCOUNT DESCRIPTION OBJECTIVE

Volume Price reduction for large To encourage buying larger

volume orders and more economical
quantities

Payment terms Price reduction for payments To encourage buyers to pay

made within specific time sooner
periods
 Standard types of price discounts

Discount Description Objective

Seasonal Price reduction for orders To stimulate demand in

preceding and following slower periods and to
peak demand smooth out order

Promotional Price reduction for To encourage trade members

promotional services to make special efforts to
performed by trade members stimulate product demand.