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Ritisha Choudhary 100
Riya Swati 101
Rohit Kumar Gourav 102
Rucha Mirashi 103
Sana 104
Akanksha Sangode 105
Saumya Gupta 107
GEOGRAPHICAL PRICING
 Adjusting an item's sale price based on the buyer's location.
 Sometimes the difference in sale price is based on the cost
to ship the item to that location or what the people there
are willing to pay.
 Geographical pricing might result in a California-grown
avocado costing less in San Francisco than in Omaha, for
example.
 Companies will try to gain maximum revenue in the
markets in which it operates, and geographical pricing
enables such practices.
Geographic Pricing Strategies :
 In pricing, a seller must consider the costs of shipping
goods to the buyer.
 These costs grow in importance, as the freight
becomes a larger part of total variable costs.
 Pricing policies may be established whereby the buyer
pays all the freight expense, the seller bears the entire
cost, or the seller and the buyer share this expense.
Point-of-Production Pricing
 In a widely used geographic pricing strategy, the seller
quotes the selling price at the point of production and
the buyer selects the mode of transportation and pays
all freight costs.
 Usually referred to as FOB factory pricing, this strategy
is the only one in which the seller does not pay any of
the freight costs.
 Under FOB factory pricing, the seller nets the same
amount on each sale of similar quantities.
 The delivered price to the buyer varies according to
the freight costs.
Uniform Delivered Pricing
 The same delivered price is quoted to all buyers
regardless of their locations.
 This strategy is sometimes referred to as "postage
stamp pricing" because of its similarity to the pricing
of first-class mail service.
Zone-Delivered Pricing
 This divides a seller's market into a limited number of
broad geographic zones and then sets a uniform
delivered price for each zone.
 Zone-delivered pricing is similar to the system used in
pricing package-delivery services.
Freight-Absorption Pricing
 To penetrate distant markets, a seller may be willing to absorb part of
the freight cost.
 Thus, under freight-absorption pricing, a manufacturer will quote to
the customer a delivered price equal to its factory price plus the freight
costs that would be charged by a competitive seller located near that
customer.
 A freight-absorption strategy is adopted to offset competitive
disadvantages of FOB factory pricing. With FOB factory price, a firm is
at a price disadvantage when trying to sell to buyers located in markets
near competitor's plants.
 The reason? Since buyers pay the freight costs under FOB factory
pricing, these charges will grow as the distance between the supplier
and the customer increases. A nearby supplier has an advantage over
more distant suppliers – at least with respect to freight costs. Freight
absorption erases any price advantage due to differences in freight
costs.
Example of FOB..
 Harley Davidson India
High price due excessive tariff rate coupled with taxes.
Price in India Price in US
Rs. 15,51,534 ($23460.67) $16,699
Introducing LUPs in rural areas
 Example :
 Coca-cola introducing “ chota coke” at coinage pricing
of Rs 5.
iPhone 5S world price index shows it is most expensive in Jordan –
and India
Iphone 6s
Houses in Mumbai vs houses un
Raipur
Offering smaller SKUs at low price
targeting daily and weekly wage
earners
 Videocon was one of the first companies to enter the
rural market with a plethora of products in the home
appliances attacked market leader Philips.
Zone Pricing Strategies
 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.
Zone Pricing (contd.)
Pricing of gasoline based on a complex and secret weighting
of factors :
 number of competing stations
 number of vehicles
 average traffic flow
 population density
 geographic characteristics
Zone Pricing (contd.)
Courier Services Based on Distances :
Thank You

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Geographical pricing strategy

  • 1. Ritisha Choudhary 100 Riya Swati 101 Rohit Kumar Gourav 102 Rucha Mirashi 103 Sana 104 Akanksha Sangode 105 Saumya Gupta 107
  • 2. GEOGRAPHICAL PRICING  Adjusting an item's sale price based on the buyer's location.  Sometimes the difference in sale price is based on the cost to ship the item to that location or what the people there are willing to pay.  Geographical pricing might result in a California-grown avocado costing less in San Francisco than in Omaha, for example.  Companies will try to gain maximum revenue in the markets in which it operates, and geographical pricing enables such practices.
  • 3.
  • 4. Geographic Pricing Strategies :  In pricing, a seller must consider the costs of shipping goods to the buyer.  These costs grow in importance, as the freight becomes a larger part of total variable costs.  Pricing policies may be established whereby the buyer pays all the freight expense, the seller bears the entire cost, or the seller and the buyer share this expense.
  • 5. Point-of-Production Pricing  In a widely used geographic pricing strategy, the seller quotes the selling price at the point of production and the buyer selects the mode of transportation and pays all freight costs.  Usually referred to as FOB factory pricing, this strategy is the only one in which the seller does not pay any of the freight costs.  Under FOB factory pricing, the seller nets the same amount on each sale of similar quantities.  The delivered price to the buyer varies according to the freight costs.
  • 6. Uniform Delivered Pricing  The same delivered price is quoted to all buyers regardless of their locations.  This strategy is sometimes referred to as "postage stamp pricing" because of its similarity to the pricing of first-class mail service.
  • 7. Zone-Delivered Pricing  This divides a seller's market into a limited number of broad geographic zones and then sets a uniform delivered price for each zone.  Zone-delivered pricing is similar to the system used in pricing package-delivery services.
  • 8. Freight-Absorption Pricing  To penetrate distant markets, a seller may be willing to absorb part of the freight cost.  Thus, under freight-absorption pricing, a manufacturer will quote to the customer a delivered price equal to its factory price plus the freight costs that would be charged by a competitive seller located near that customer.  A freight-absorption strategy is adopted to offset competitive disadvantages of FOB factory pricing. With FOB factory price, a firm is at a price disadvantage when trying to sell to buyers located in markets near competitor's plants.  The reason? Since buyers pay the freight costs under FOB factory pricing, these charges will grow as the distance between the supplier and the customer increases. A nearby supplier has an advantage over more distant suppliers – at least with respect to freight costs. Freight absorption erases any price advantage due to differences in freight costs.
  • 9.
  • 10.
  • 11. Example of FOB..  Harley Davidson India High price due excessive tariff rate coupled with taxes. Price in India Price in US Rs. 15,51,534 ($23460.67) $16,699
  • 12. Introducing LUPs in rural areas  Example :  Coca-cola introducing “ chota coke” at coinage pricing of Rs 5.
  • 13. iPhone 5S world price index shows it is most expensive in Jordan – and India
  • 15. Houses in Mumbai vs houses un Raipur
  • 16. Offering smaller SKUs at low price targeting daily and weekly wage earners
  • 17.  Videocon was one of the first companies to enter the rural market with a plethora of products in the home appliances attacked market leader Philips.
  • 18. Zone Pricing Strategies  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.
  • 19. Zone Pricing (contd.) Pricing of gasoline based on a complex and secret weighting of factors :  number of competing stations  number of vehicles  average traffic flow  population density  geographic characteristics
  • 20. Zone Pricing (contd.) Courier Services Based on Distances :