Question

How should marketers respond to price changes?

Name and describe the four forms of segmented pricing, give respective examples and explain the conditions to apply segmented pricing strategy.

Answer 1

How should marketers respond to price changes

Initiating and responding to price changes An organization may initiate price changes to deal with new forces arising within the organization or the market. The price change may occur at both directions: increasing price or lowering prices.

four forms of segmented pricing

1. Customer-segment pricing.-Customer segmentation is the process of dividing customers into groups based on common characteristics.Segmented pricing is a situation, when seller or a company establishes different prices (two or more), for one the same product. ... Also, when customers buy some product or use some service very rarely, segmented pricing is a well-chosen strategy. Segmented pricing, can be implement by coupons.
2. Product-form pricing-Product-form Pricing: Different prices charged for different variants of the same product. E.g., The price of the same type of a bike may vary because of different color and add-on features.
3. Location pricing-is the practice of modifying a basic list price based on the geographical location of the buyer. It is intended to reflect the costs of shipping to different locations. ... It can be either the buyer or seller that arranges for the transportation.
4. Time pricing-time pricing gives consumers information about the actual cost of electricity at any given time.time pricing lets consumers adjust their electricity usage accordingly; for example, scheduling usage during periods of low demand to pay cheaper rates.

conditions to apply segmented pricing strategy.

The first requirement is to find groups of customers, some that are willing to pay more than others. To keep this simple, let's hold it to 2 segments, those willing to pay more and those willing to pay less. Let's call them the “poor” and the “rich”. This is a pretty common segmentation anyway,With a price segmentation strategy, you offer the same product at different prices to different groups. If you operate a product segmentation strategy, you offer different versions of a product to different groups. Segmentation is most effective when you can identify clear differences in market requirements.

examples

In some tourist cities, residents get lower prices for public transport and parking. For example, in York, residents get lower parking charges. This is because tourists tend to have more inelastic demand. Also, residents use the facilities throughout the year and contribute more taxes. Tourists will have greater demand during the peak holiday season. The higher price for tourists is a way of taking consumer surplus from the inelastic demand of tourists.