Discuss the forms of demand- based pricing.

a) Odd-even pricing: Is the techniques of ending price figures with certain numbers , usually odd ones such as ksh. 99 instead of ksh 100. Customers like to receive change. Consumers perceive the price to be to be cheaper even though there is no significant difference with ksh .100. Even prices are more unusual than odd prices. Even prices for upscale goods.
b) Price bundling : Offering a product, options, and customer service for one total price. i.e. involves assembling a number of products in a single package to save the customer the trouble of searching out and buying each other separately. The marketer may unbundle price, i.e. breakdown prices and allow customers to decide what they want to purchase. Bundling has psychological benefits as well as economic rationale as it lowers the price and marketing costs.
c) Prestige Pricing : Is used when price is used as a measure of quality i.e. price is used as a symbol of status e.g. luxury goods such as jewelery , perfumes , clothing , hotel and restaurant services
d) Psychological pricing or value –based pricing: pricing based on perceived value in the product rather than the seller’s cost .This is particularly applicable to products with a high involvement or emotive products. It means that the marketer cannot design a product and marketing program and then set the price .Price is considered alongside with other marketing mix variables before the marketing program is set.
e) Price lining: involves number of products being sold at price specific points regardless of the cost differences. For instance, a clothing retailer, might sell ladies skirts at ksh. 250, 400 and 550 , capitalizing on the consumer’s idea on price banding( setting a range of prices to spend).The skirts may have even been purchased at the same price from the supplier but are priced differently based on colour, size ,style and expected customer response.
f) Promotional pricing: used as a sales promotion technique to stimulate a market or reinforce perceptions of value in the short-term. A number of product lines are selected and priced lower to attract customers ‘ attention but other items a re highly priced .This makes customers feel that they are making a bargain from the purchase .Sellers hope to recoup the reduction from the sales of the full- priced items.
g) Seasonal pricing : involves time specific markdowns such as end- of –seasons sales e.g. end of summer , winter, Christ-mass, back-to-school sales, weekend sales etc. A great deal of psychological excitement is created among customers by providing a limited number of cut-priced goods , for example , on a first come first served basis. Those who do not get bargain of their choice still spend in the store.
h) Quantity pricing discounts or multi-sue pricing : a sales promotion technique that rewards customers for spending a certain amount or coupons given for repeat buyers as a means of offering customers something extra.
i) Differential pricing: discriminatory pricing that uses different prices for different market segments for the same product. May be based on customers, product differentiation , place or time etc. The different prices are justified by the peripheral services and psychological benefits.

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Lellah answered the question on November 5, 2021 at 12:42