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WHAT ARE THE COMMON PRICING POLICIES ADOPTED BY MARKETING ORGANIZATIONS?

An organization's pricing policies are the rules it establishes for setting prices that will enable it to achieve marketing objectives. Price policies are generally divided into four categories: psychological pricing (pricing concerned with tendencies in consumer behaviour), promotional pricing (pricing concerned with the availability of discounts and allowances for attracting potential customers), geographic pricing (pricing that takes into account freight and shipping costs and whether the seller or the buyer is to absorb such costs), and flexible pricing (charging different prices to different customers). Product-mix pricing involves establishing low and high prices for various combinations of product offerings so that on balance profits are maximized.

HOW DO MARKETERS QUOTE SELLING PRICES TO PROSPECTIVE BUYERS?

The marketing organization starts with a list price and then offers discounts and allowances to potential buyers. The discounts commonly offered to distributors include cash discounts for prompt payment; slotting allowances for securing distribution of new products; quantity discounts, which are meant to encourage volume purchases; performance allowances, which are paid to customers for performing a promotional function; seasonal discounts; rebates, which are temporary discounts intended to stimulate demand; and trade-in allowances.

All discounts offered must be made available to all competing distributors and must be offered, where applicable, on a proportionate basis: that is, distributors must be treated fairly in accordance with their size.

HOW DO MARKETING ORGANIZATIONS AND THEIR CUSTOMERS BENEFIT FROM LEASING PRODUCTS?

Leasing is becoming a popular pricing practice in the Canadian marketplace. Certain industries—computer, automobile, and aircraft, for example—now frequently use leasing to generate new business. For the marketer, the primary advantage of leasing is that it preserves a sale that would have been lost had the lease option not been available. For customers, leasing a product allows them to avoid any potential debt load that would result from buying the product outright.