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Chapter 6: Capturing Customer Value: Price to Exchange Back To Chapter

6.7: Pricing Tactics I

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Pricing Tactics I

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Pricing tactics are temporary methods businesses utilize to adjust prices according to the five Cs to stimulate demand and attain marketing objectives.

The first tactic is Markdowns, where the product's original selling price is lowered to boost sales, like airlines offering discounts on unsold seats as the departure date approaches.

Second is Quantity discounts that encourage customers to purchase in bulk by offering reduced prices for larger quantities.

For example, an apparel retailer offers t-shirts for 15 dollars each but discounts it to 13 dollars when purchasing three or more, boosting consumption.

Third, Seasonal discounts in which price reductions are offered during specific times of the year to leverage seasonal demand.

Like, hotel rooms are discounted during off-seasons.

Fourth is Coupons that provide product discounts to foster loyalty or attract new buyers.

These can be distributed via various channels, such as print or digital media, like a restaurant offering food coupons digitally or in print for the next purchase.

Markdowns, seasonal discounts, and coupons are central to high/low pricing strategies, leading to increased sales.

6.7: Pricing Tactics I

Pricing tactics are short-term strategies businesses use to sell their offerings to meet specific objectives such as boosting sales, attracting new customers, or clearing out inventory. These tactics are:

• Markdown: is a pricing tactic where retailers reduce the selling price of a product, typically to clear out old inventory or make room for new items. It is common in fashion retailing and electronics, where product life cycles are short.
• Quantity Discounts: offer a reduced price per unit when customers buy a larger quantity. The aim is to incentivize bulk buying and increase overall sales volume. For example, "buy one, get one free" or "buy two, get 20% off".
• Seasonal Discounts: are price reductions offered during certain times of the year, often tied to seasons or holidays. Retailers use this tactic to boost sales during slow periods or to capitalize on high-demand periods like Christmas or Black Friday.
• Coupons: give customers a discount on specific products upon presentation at the point of sale through various channels – newspapers, direct mail, email, and mobile apps. Coupons attract new customers, reward loyal customers, or encourage repeat purchases.

Each of these pricing tactics can be effective depending on the context and objectives of the business.

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