There are times when pricing adjustments are made. List three specific types of

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Business Finance

Description

There are times when pricing adjustments are made. List three specific types of price adjustments and explain the rational for making such an adjustment.

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Explanation & Answer

1. discount and allowance pricing - they are used to promote sales, reduce inventory, and reward or encourage behaviors that benefit the issuer of the discount or allowance.They can be applied anywhere in the distribution channel  between the manufacturer and middlemen

2. psychological pricing - By pricing products strategically, a company may increase sales without significantly reducing prices. In some cases, a higher price is actually more likely to increase sales. Consider several factors in crafting a psychological pricing strategy to get the best results.

3. promotional pricing - to attract attention to a product, brand or retailer. The idea is to use the appeal of low cost to let consumers know that a seller, label or item exists. Those who use the technique believe that brand or company loyalty cannot develop until this consumer awareness grows. Loyalty is a goal because it means repeat business and a subsequent increase in revenue and profit. This translates to remaining competitive in the market


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