Correct option is C
Geographical pricing strategies, also known as geographical price differentials, involve adjusting the price of a product or service based on the customer's location. This practice accounts for factors like shipping costs, competition levels, local taxes, market demand, and consumer purchasing power.
Evaluating each option:
· A. F.O.B. Factory Pricing (Free on Board): This is a geographical pricing strategy where the buyer pays all the freight costs from the seller's location to their destination. The seller's responsibility for the goods ends when they are loaded onto the transport vehicle at the point of origin (factory).
· B. Zone Pricing: This strategy divides the market into several zones and charges different prices (often including transportation costs) within each zone. The price may be uniform within a zone but different between zones.
· D. Postage Stamp Pricing: This is a type of uniform delivered pricing where the same delivered price is charged to all customers regardless of their location. The price includes an estimated average transportation cost.
· E. Basing Point Pricing: This involves setting a base price for a product at a specific location (the basing point) and adding transportation costs calculated from this point to the customer's location, regardless of the actual shipping origin. This method is often used for bulky goods or in oligopolistic markets.
Information Booster: Geographical Price Differentials are used by businesses to adjust their prices based on customer location, transportation costs, or regional market conditions. Common methods like F.O.B Factory Pricing and Basing Point Pricing help businesses manage and control the costs related to shipping and distribution across different regions, while Zone Pricing and Postage Stamp Pricing are used to set standard or differentiated rates for various geographic zones or delivery areas.
Additional Knowledge:
C. Loss Leader Pricing: This is a strategy where a product is sold at a very low price, sometimes below cost, to attract customers and stimulate sales of other, more profitable items. This is not primarily about geographical location, but rather about influencing customer purchasing decisions.