Price Adjustments
Price adjustment is put in place to protect both the consumer and the retailer from a sudden increase in a product’s price. It is often included when such a risk is bound to happen. Price protection works this way: A customer can demand a partial refund on the purchase price of an item if, after purchase, there is a decrease in the price of that same item. For example, a customer bought a freezer for $300, but the price of the freezer drops to $150 afterward. Such a customer can demand a partial refund from the store, even if the freezer has been used. This is different from the return policy in that, for the return policy, the item has to be returned unused. Staples, Gap, Macy’s, etc have some of the retailers that have price adjustment policies. Certain products are often excluded from price adjustment, depending on the retailer.
Price Adjustment Strategies
- Price adjustment for product changes
- Price adjustment for new competition
- Price adjustment for changing customer preferences
- Price adjustment for changing market conditions
- Price adjustment for price increases
1. Discount and Allowance Pricing Strategy
A discount is a reduction in the basic price of an item, often done as a form of reward to the customer. It might be given as a reward for early payment, off-season buying, bulk purchases, etc. This kind of price adjustment is known as a discount and allowance pricing strategy. For example, if a pen costs $2, a discount can be given to someone buying 3 pens. The customer gets to pay $5 instead of $6. ..
2. Segmented Pricing Strategy
When a product is sold for more than one price to different buyers, it is often related to the class or category of people paying for it. An example is the price of a concert ticket. Students might be asked to pay less than other regular people. This is a segmented pricing strategy. When aged people are given less value for the same product, it is a segmented pricing strategy. Companies also use this to sell products in different regions. The price in a region may be greater than in another, depending on the economic class of the people in each of these locations.
3. Psychological Pricing Strategy
Selling at a higher price to attract customers’ interest is a strategy used by sellers in stores where different brands of cereals are displayed. Without prior knowledge of the quality of any of those products, a customer is bound to choose a brand at a fairly higher price than others. This is the psychology of customers. ..
4. Promotional Pricing Strategy
Some companies use promotional pricing strategies to attract customers within a short period. Prices of the product are usually lowered below the list price and sometimes below the cost price too. This strategy might harm the brand or company, in that, it sends the wrong message to customers about the quality of the product. It may lead to a constant reduction in price to make sales and this is not profitable.
5. Geographical Pricing Strategy
Some companies employ geographical pricing strategy to charge customers for products in different geographical locations around the world. Prices are set based on the location and the economy of the citizens in the area. Elite class areas are charged higher for a product while economically backward areas are charged less for the same product.
6. International Pricing Strategy
Companies that have products launched all over the world need to decide the price of their product in each country. A uniform price can not be issued due to the different incomes per capita of each country. Factors such as economic conditions, marketing objectives, competitiveness in the area, law and order, regulations, etc, are considered in setting prices in different countries. Additionally, some brands opt for uniform pricing all over the world. This allows them to control costs and ensure that their products are affordable for everyone.
Conclusion
In order to serve consumers better, retailers need to know about price adjustments and their rights as a customer. Retailers should be aware of their legal rights when it comes to price adjustments, and be able to make the necessary changes in prices in order to serve customers better.
When asking for a price adjustment, be sure to know the store’s policy on price adjustments.
Price matching is a type of shopping that involves demanding a partial refund if goods are sold at a higher price than it is in other stores. Price adjustment does not involve other stores.
