Match the items of the following two lists and indicate the correct code:List - I List - II a. Trade channel discounts i. Oligopoly pricing b. Tie-up sales ii. Locational price differentials c. Price being non-responsive to changes in demand costs iii. Differential pricing d. Basing-point pricing iv. Product-line pricing
a-iii, b-iv, c-i, d-ii
Each pricing practice in List I is matched to the pricing concept it illustrates, by asking what pricing principle the practice rests on.
Trade channel discounts mean charging different effective prices to different classes of buyers in the distribution chain, which is an instance of differential pricing, so (a)-(iii). Tie-up sales, where the purchase of one item is linked to another item of the seller's range, are handled through product-line pricing, since the prices of related products in a line are set jointly rather than independently, so (b)-(iv). A price that does not respond to changes in demand and costs is the well-known price rigidity or stickiness of oligopoly, where rivals hesitate to change price for fear of retaliation, so (c)-(i). Basing-point pricing quotes delivered price from a designated base location, which creates locational price differentials, so (d)-(ii).
Assembling these gives a-iii, b-iv, c-i, d-ii, which is the second code. The unifying thread is the basis on which price varies: by buyer class, by product line, by competitive structure, and by location.
Hence the correct match is a-iii, b-iv, c-i, d-ii.
Similar Questions
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The practice of selling below cost, with an intention to destroying the competitor is referred to as :
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(a) Determining Demand
(b) Analysing competitors' costs, prices and offers
(c) Selecting the Final Price
(d) Selecting the Pricing Objective
(e) Estimating costs
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Codes:
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Important Questions from Pricing decisions
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B. What percentage of total expenditure does the product represent
C. Who bears the cost and type of retailer from where customer purchases
D. Consumption of product by the customer
E. Knowledge about the product
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I. Cost plus
II. Competitive
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IV. Trial and error
Codes :
