A company prices a 2 litre bottle of its mineral water at ₹ 30 but 60 ml of the same water in a moisturizer spray for ₹ 75. This is an example of which one of the following pricing practices?
Product-Form pricing
Concept: Product-form pricing is a form of price discrimination in which the different versions or 'forms' of essentially the same product are priced according to the value each form conveys, and not in proportion to their production costs.
Here the same water is sold in two different product forms at prices that are not proportional to quantity, which points to this specific price-discrimination form. The 60 ml presented as a moisturizer spray is priced far higher per ml than the 2-litre bottle, because the changed form raises the perceived value.
Example: The same steel sold cheaply as a raw ingot but at a much higher price per gram once formed into precision surgical blades shows the same idea - the form, not the material cost, drives the price.
Checking the options: customer-segment pricing charges different classes of buyers differently; image pricing sets a higher price purely on brand image; and location pricing varies price by place. None of these fits pricing by product form as here, so option (1) is the only one that matches.
Hence it is an example of product-form pricing.
Similar Questions
Find the most appropriate sequence of life-cycle of price for a product, from the initial stage to the mature stage.
After determining its pricing objectives, what is the next logical step a company should take in setting its pricing policy ?
The practice of selling below cost, with an intention to destroying the competitor is referred to as :
Select the correct sequence of steps in setting a pricing policy:
(a) Determining Demand
(b) Analysing competitors' costs, prices and offers
(c) Selecting the Final Price
(d) Selecting the Pricing Objective
(e) Estimating costs
(f) Selecting a pricing method
Codes:
The price setting method most closely corresponding to the concept of product positioning is:
When the Companies pay less attention to its own costs or demands and bases its price largely on competitors’ prices, then it is known as :
The practice of selling below cost, with an intention to destroying the competitor is referred to as:
After determining its pricing objectives, what is the next logical step a company should take in setting its pricing policy?
Find the most appropriate sequence of life-cycle of price for a product, from the initial stage to the mature stage.
Pricing decisions are most complex at which stage of the product life cycle?
Important Questions from Pricing decisions
Pricing practice of setting a price target and then developing a product that would allow the firm to maximise total profit at that price is called:
Which of the following is the characteristic of price?
In which of the following price adjustment strategies. a company reduces prices to reward customer responses such as volume purchases, paying early or promoting the product?
The consumer's price sensitivity is / are influenced by
A. Who bears the cost
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
Choose the most appropriate answer from the options given below:
- Which of the following are the informal pricing methods ?
I. Cost plus
II. Competitive
III. Rate of return
IV. Trial and error
Codes :
