240 CHAPTER 9 PRICINGTHEPRODUCT
Somemanufacturersorwholesalersalsogiveprizemoneycalledspijfsforretailerstopass
ontotheretailer'ssalesclerksforaggressivelysellingce11ainitems.Thisis especiallycom-
monintheelectronicsandclothingindustries,whereitisusedprimarilywithnewprod-
ucts,slowmovers,orhighmarginitems.
Trade-inallowancesalSOreducethebasepriceofa productorservice.Thesea!"eoften
Llsedtoallowthesellertonegotiatethebestpricewitha buyer.Thetrade-inmay,ofcourse,
beofvalueifit canberesold.Acceptingtrade-insisnecessaryinmarketingmanytypes
ofproducts.Aconstructioncompanywitha usedgraderworth$70,000wouldnotlikely
buya newmodelfromanequipmentcompanythatdidnotaccepttrade-ins,particularly
whenothercompaniesdoacceptthem.
PriceBundling
A verypopularpricingstrategy,pricebundling,is togroup similarorcomplementaryprod-
uctsandto chargea totalpricethatisloweriftheyweresoldseparately.DellComputers
andGatewayComputersfollowthisstrategybycombiningdifferentcomponentsfora set
price.Customersassumethatthesecomputerexpertsareputtingtogetheraneffectiveprod-
uctpackageandtheyarepayingless.Theunderlyingassumptionofthispricingstrategy
is thattheincreasedsalesgeneratedwillmorethancompensateforalowerprofitmargin.
Itmayalsobea wayofsellinga lesspopularproductbycombiningit withpopularones.
Clearly,industriessuchasfizulTIcialservicesandtelecommunicationsarebigusersofthis.
PsychologicalAspectsofPricing
Price,asis thecasewithcertainotherelementsinthemarketingmix,appearstohavemean-
ingtom8.:1Ybuyersthatgoesbeyonda simpleutilitarianstatement.Suchmeaningis often
referredtoasthepsychologicalaspectofpricing.Inferringqualityfrompriceisacc,m-
monexampleofthepsychologicalaspect.Abuyermayassumethata suitpricedat$500
isofhigherqualitythanonepricedat$300. Froma cost-of-production, rawmaterial, or
workmanshipperspective, thismayormaynotbethecase.Thesellermaybeabletosecure
ther.igherpricebynonpricemeanssucr.asofferingalterationsandcreditorthebenefitto
thebuyermaybeinmeetingsomepsychologicalneedsuchasegoenhancement.Insome
situations,thehigherpricemayoepaidsimplyduetolackofinformationorlackofcom-
parativeshoppingskills.Forsomeproducts orservices,thequantitydemandedmayact.l-
allyrisetosomeextentaspriceis increased.Thismight bethecasewithanitemsuchas
a furcoat.Sucha pricingstrategyiscalledprestigepricing.
Productsandservicesfrequemlyhavecustomarypricesinthemindsofconsumers.
Acustomarypriceisonethatcustomersidentifywithparticularitems.Forexample, for
manydecadesa five-stickpackageofchewinggumcostfivecentsanda six-ouncebottle
ofCoca-Colacostfivecents. Candybarsnowcost 60 centsormore,a customarypricefor
a standard-sizedbar.Manufacturerstendtoadjusttheirwholesalepricestopermitretail-
er::;inusingcustomarypricing.However,aswehavewit:ressedduriDgthepa st decade,prices
havechangedsooftenthatcustomarypricesareweakened.
Anothermanifestationofthepsychologicalaspectsofpricingistheuseofoddprices.^3
Wecallpricesthatendinsuchdigitsas5,7,8,and 9 "oddprices"(e.g.,$2.95,$ 15.98,or
$299.99).Evenpricesare$3,$16,or$300.Fora longtimemarketing;:>eoplehaveattempted
toexplainwhyoddpricesareused.It seemstomakelittledifferencewhetheronepays
$29.95or$30foranitem.Perhapsoneofthemostoftenheardexplanationsconcernsthe
