What are the different types of promotional pricing?
What will be an ideal response?
Companies can use any of the following pricing techniques to stimulate early purchase:
• Loss-leader pricing - Supermarkets and department stores often drop the price on well-known
brands to stimulate additional store traffic. This pays if the revenue on the additional sales compensates for the lower margins on the loss-leader items.
• Special event pricing - Sellers can establish special prices in certain seasons to draw in more
customers.
• Special customer pricing - Sellers can offer special prices exclusively to certain customers.
• Cash rebates - Auto companies and other consumer-goods companies offer cash rebates to
encourage purchase of the manufacturers' products within a specified time period. Rebates
can help clear inventories without cutting the stated list price.
• Low-interest financing - Instead of cutting its price, the company can offer customers low-interest financing.
• Longer payment terms - Sellers stretch loans over longer periods and thus lower the monthly payments. Consumers often worry less about the interest rate of a loan, and more about whether they can afford the monthly payment.
• Warranties and service contracts - Companies can promote sales by adding a free or low-cost
warranty or service contract.
• Psychological discounting - This strategy sets an artificially high price and then offers the
product at substantial savings.
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In the sale of a house, the seller agrees to owner-finance the property. The buyer becomes the owner of record of the property and the seller has a lien on the property. This type of financing agreement is called a:
A. Purchase money mortgage. B. Contract for deed. C. Land contract. D. Reverse mortgage.
A leasehold is a payment
A) for the right to use certain property. B) for the right to sublease certain property. C) to give up or to get out of a lease. D) to improve leased property.