CLEP Principles of Marketing Study Notes

In personal selling instead of a one price policy

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In personal selling, instead of a One-Price policy, sellers often adopt a Flexible Pricing policy, where the seller charges different prices to different buyers in similar circumstances.
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What distinguishes a retailer from a wholesaler is that in the case of the retailer, the customer is purchasing the product for consumption. The difference between a retailer and a wholesaler is the motive of the customer--is he purchasing for his own use or consumption, or is he purchasing to sell, or use in a product that he will sell? Personal selling often involves a Flexible Pricing policy , versus One-Price policy , where all buyers pay the same price in similar situations. For example, car salesmen often negotiate on the price, and two people may buy similar models on the same day for significantly different prices. Unit Price is the price per unit for a product, and simplifies comparisons between brands and various package sizes. Often on or near a product. One place unit prices are provided are at grocery stores, which often list the cost per ounce or other unit for foods. In the absence of other specific product information, buyers often rely on price as an indicator of quality and use this measure when evaluating brands. Buyers will often base quality on price, especially when they have little confidence in their ability to judge product quality and think that there are substantial differences in quality between brands. Psychological pricing encourages purchases based on emotional rather than rational responses. Mainly used at the retail level, and includes: 1. Odd-Even Pricing - ends prices with certain numbers to try to influence buyers' perceptions of the price of the product--for example, charging $99.95 instead of $100. Most common is setting prices just below even dollar values, which supposedly looks more attractive to certain customers than even dollar values. Sometimes even prices are used for the opposite effect, to give a product an exclusive or upscale image--i.e. charging $40 instead of $39.95. 2. Prestige Pricing - involves setting prices at an artificially high level to provide prestige or a quality image. Used especially when buyers associate a higher price with higher quality. Jewelry , perfumes, and automobiles are examples of items which are prestige priced. 3. Price Lining - organization sets a limited number of prices for selected groups of merchandise. Simplifies consumers' evaluation of alternative products. For example, a retailer might have a line of various brands and styles of similar quality men's shirts selling for $20, and another line, consisting of higher quality shirts for $28. If the consumer shops within a certain price line, then he doesn't need to worry about price--he can base his decision on other factors. 4. Leader Pricing - firm prices one or more products below the usual price to attract customers. Idea is that it will lead to increased store traffic , as customers come to take advantage of the lower prices. Hopefully, this will result in increased sales of the other regularly priced merchandise to offset the reduced priced products.
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