PRICE ADJUSTMENT STRATEGIES● DISCOUNT & ALLOWANCE- CASH DISCOUN...

5. Price adjustment strategies● Discount & Allowance- Cash discount: A price reduction to buyers who pay their bills promptly.- Quantity discount: A price reduction to buyers who buy large volumes- Quantity premium: A surcharge paid by buyers who purchase high volumes ofa product.- Functional discount (trade discount): A price reduction offered by the seller totrade channel members that perform certain functions, such as selling, storingand record keeping. - Seasonal discount: A price reduction to buyers who buy merchandise orservices out of season. - Trade-in allowance: A price reduction given for turning in an old item whenbuying a new one.- Promotional allowance: A payment or price reduction to reward dealers forparticipating in advertising and sales support programmes.● Segmented Pricing- Segmented pricing: Pricing that allows for differences in customers, productsand locations. The differences in prices are not based on differences in costs.● Psychological pricing- Psychological pricing: A pricing approach that considers the psychology ofprices and not simply the economics; the price is used to say something aboutthe product.● Promotional pricing- Promotional pricing: Temporarily pricing products below the list price, andsometimes even below cost, to increase short-run sales● Geographical pricing- Geographical pricing: Pricing based on where customers are located.Topic 8: Distribution