These price changes account for various customer differences and changing environmental situations. Discount pricing and allowances Discounts and allowances are introduced to reward customers for certain responses . Discriminatory pricing Discriminatory pricing involves selling a product at two or more prices when the difference in price is not based on the cost of producing the good. For this to be effective the market must be segmentable and the different segments must have different levels of demand. In using psychological pricing, sellers consider the psychological impact the price will have on the consumers.
Consumers often associate higher priced products with higher quality.
Also buyers carry prices in their mind that they compare when looking at the price of a product. Marketers can use this knowledge to their advantage also. Promotional pricing With promotional pricing, companies temporarily reduce their prices to encourage short term sales. This can take several forms including loss leaders, special event pricing and cash rebates. A company has to decide how to price their product to various geographic locations.