Page 10 - PCM - Pricing strategies Revista

GEOGRAPHIC PRICING REAL LIFE EXAMPLE

G An example of geographic pricing is Anastasia
eographic pricing can be used when
Beverly Hills Brow Powder Duo beauty product in
there are two markets in different
locations divided by a transportation
cost. The price of the good reflects the location of US Sephora versus in French Sephora.
The product is US made and costs $23 USD while
where it is bought.
in France, the same product costs 26.95€ ($28.93

This strategy attempts to minimize differences USD).
between the two markets by sharing the

transportation cost between them. There are
three different types of geographic pricing:

(1) FOB: occurs when the company charges a
higher price in the second market to cover the

transportation and shipping costs. The good is
cheaper in the market it is produced.

(2) Uniform delivered price: the price of the

product is the same in both zones, regardless of
their location. The transportation costs are split
between them.

(3) Freight absorption cost: where the original

operating market pays for the transportation cost.

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PRODUCT AND CLIENTS MANAGEMENT