Question

Find a specific example of each of the following. Explain the benefit to the firm in each case:

    Group Pricing
    Channel Pricing
    Regional Pricing
    Time-based Pricing
    Product versioning
    Coupons and Rebates

Answer 1

Group pricing:

Group pricing is pricing strategy used for maximizing revenue by offering discounts to group of customers vs individual customers. Specific example include hotel pricing or airline pricing where for a group with customers more than a specific threshold (5 or 10 etc.), a discount pricing is provided for the group.

Channel pricing:

Channel pricing is strategy by business offering discriminatory pricing based on the distribution channels. Distribution channels is the key factor in pricing. Customers using different channels will see different prices. Specific examples include online pricing, where higher discounts are offered due to the lower costs of distribution compared to traditional channels.

Regional pricing:

Regional pricing is a pricing model where the price is derived basis the location where the product is being sold finally. Price changes with region due to tax factors or transportation costs etc. Example includes higher price in a far away location for a product due to the high transportation costs included.

Time-based Pricing

Time based pricing is used by organizations to increase demand in off-peak hours as well as overall demand balancing. Happy hours is good example of this. Other examples are for flights, where early mornings or evenings are peak hours, and thus prices are typically high. For flights in the afternoon or late night, prices are kept low to increase demand and attract price sensitive customers.

Product versioning

Product versioning is maintaining differential pricing based on the product versions. With improved versions, where products typically have higher and better features, prices are increased to grow the revenue as well as maintain price differential from the previous version. Specific example include pricing of Microsoft office 2010 vs MS Office 2013 vs MS Office 2016

Coupons and rebates

Coupons and rebates are short term strategies for driving sales typically run on specific products by a firm or a retail store. Coupons provide discount to customers, and because of the discounts, sales increase during the period.