Price Variations

• In addition to employing varies pricing strategies  firms can also make use of price variations
• This is when prices are adjusted depending on a variety of factors
• This is usually achieved by using discounts
• There are therefore a number of discounts
• Discounts for bulk purchases
• Discounts for prompt payments
• Purchases that are made during off-peak periods
• Discounts for favored customers
• Family brand prices ensure that products in a given family of brands e.g. Heinz beans, tomato sauce and ketchup are priced in relation to one another
• Psychological pricing- is when prices are set according to psychographic techniques for example $9.99 instead of $10
• The process used by retailers of separating goods into cost categories in order to create various quality levels in the minds of consumers.
• For example downloadable songs are charged at 99 cents per download
• Some businesses especially supermarkets make use of loss leaders for a small range of their products
• These goods are sold to customers at below cost prices and attracting customers and allowing the business to make profit and recover costs on other items in the shop
• The hope is that the customer will not just buy the under priced item but will also put the other better priced items in the basket

To access more topics go to the O Level Business Notes