zone pricing

(noun)

the practice of modifying a basic list price based on the geographical location of the buyer

Related Terms

Examples of zone pricing in the following topics:

  • Geographic Pricing

    • Zone pricing: Prices increase as shipping distances increase.
    • This is sometimes done by drawing concentric circles on a map with the plant or warehouse at the center and each circle defining the boundary of a price zone.
    • (The term "zone pricing" can also refer to the practice of setting prices that reflect local competitive conditions (i.e., the market forces of supply and demand, rather than actual cost of transportation).
    • Many business people and economists state that gasoline zone pricing merely reflects the costs of doing business in a complex and volatile marketplace.
    • Zone pricing is also used to price fares in certain metro stations.

  • Decline

    • A fall in prices and profitability (the latter ultimately moving in the negative zone);
    • shows the actual sales and price of the personal computer from 1992 to 2002.
    • Only technologically-advanced individuals would buy one at the very steep price of $1800 (and bear in mind, $1800 in 1992 was worth a lot more than it is today).
    • As the market grew, businesses learned to be more efficient in producing the PC and prices came down.
    • The drop in prices and improvements in technology made PCs more attractive to other consumers.

  • The European Union (EU)

    • Since then, the eurozone (or Euro Zone) encompasses 17 countries.
    • The euro is designed to help build a single market by easing travel of citizens and goods; eliminating exchange rate problems; providing price transparency; creating a single financial market, price stability, and low interest rates; and providing a currency used internationally and protected against shocks by the large amount of internal trade within the eurozone.

  • Demand-Based Pricing

    • Demand-based pricing, also known as customer-based pricing, is any pricing method that uses consumer demand - based on perceived value - as the central element.
    • These include: price skimming, price discrimination, psychological pricing, bundle pricing, penetration pricing, and value-based pricing.
    • Price skimming is a pricing strategy in which a marketer sets a relatively high price for a product or service at first, then lowers the price over time.
    • Penetration pricing is the pricing technique of setting a relatively low initial entry price, often lower than the eventual market price, to attract new customers.
    • By definition, long term prices based on value-based pricing are always higher or equal to the prices derived from cost-based pricing.

  • Psychological Pricing

    • Psychological pricing is a marketing practice based on the theory that certain prices have meaning to many buyers.
    • Inferring quality from price is a common example of the psychological aspect of price.
    • Another manifestation of the psychological aspects of pricing is the use of odd prices.
    • We call prices that end in such digits as 5, 7, 8, and 9 "odd prices. " Examples of odd prices include: $2.95, $15.98, or $299.99 .
    • Psychological pricing is one cause of price points.

  • Competitor-Based Pricing

    • Competition-based pricing describes a situation where a firm has a pricing policy that reflects the pricing decisions of competitors.
    • Competition-based pricing describes the situation where a firm does not have a pricing policy that relates to its product, but reflects the pricing decisions of competitors.
    • Similar to competition based pricing, going rate pricing reflects the price that is being used by most of the companies within the industry, an industry standard more or less.
    • It can lead to price wars.
    • Show the basis of competitor-based pricing as a general pricing strategy

  • Cost-Based Pricing

    • Cost-based pricing is the act of pricing based on what it costs a company to make a product.
    • Cost-based pricing is the act of pricing based on what it costs a company to make a product.
    • Cost-based pricing involves setting a price such that:
    • Cost-based pricing is included in what is considered the "3 C's" of pricing.
    • Describe cost based pricing as it relates to general pricing strategies

  • High/Low Pricing

    • High-low pricing is a strategy where most goods offered are priced higher than competitors, but lower prices are offered on other key items.
    • High-low pricing is a method of pricing for an organization where the goods or services offered by the organization are regularly priced higher than competitors.
    • The lower promotional prices are designed to bring customers to the organization where the customer is offered the promotional product as well as the regular higher priced products.
    • High-low pricing is a type of pricing strategy adopted by companies, usually small and medium sized retail firms.
    • The way competition prevails in the shoe industry is through high-low price.

  • Value-Based Pricing

    • Value-based pricing seeks to set prices primarily on the value perceived by customers rather than on the cost of the product or historical prices.
    • Value-based pricing sets prices primarily, but not exclusively, on the value, perceived or estimated, to the customer rather than on the cost of the product or historical prices.
    • How important is price?
    • Examples include matching the price of competitors, a traditional price charged for a particular product, and charging a price that covers expected costs.
    • Examine the rationale behind value based pricing as a pricing tactic

  • Settling the List Price

    • A list price must be close to the maximum price that customers are prepared to pay and yield the maximum profit for the retailer.
    • Pricing is a key variable in micro-economic price allocation theory and part of the four "P's-" of the marketing mix; pricing, product, promotion and place.
    • The manufacturer's suggested retail price (MSRP), list price or recommended retail price (RRP) of a product is the price which the manufacturer recommends to the retailer.
    • Retailers must ask questions to set a list price.
    • A good pricing strategy is one that strikes a balance between the price floor (the price below which the organization ends up in losses) and the price ceiling (the price beyond which the organization experiences a no demand situation).