geographical pricing

(redirected from Zone pricing)

geographical pricing

the PRICING of products to customers based in different locations. In some cases differential PRICES may be charged to reflect the respective costs of physical DISTRIBUTION involved in moving goods from the factory to the buyer.

In other cases firms may simplify their pricing arrangements by means of a ‘uniform delivered price system'which involves charging the same price to all customers irrespective of their location (for example post office letters). Alternatively, customers may be grouped into a number of delivery zones and a common price charged to all customers in each zone. Such ‘basing point price systems’ involve some cross-subsidization of delivery costs between customers in the interests of maximizing the firm's total sales. See PRICE DISCRIMINATION.

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A second fulfillment center on the East Coast is in play in the coming years to take advantage of the new USPS zone pricing, and Goh is already beginning to scope out automation suppliers.
If you do not like the terms dynamic or surge pricing, which can sound somewhat harsh, think of it as inventory or customer management, or maybe zone pricing on steroids.
The last variable included in the models is meant to control for the possibility of zone pricing, in which average prices in a part of a market area are higher or lower than market averages.
It could be a promotional item or traffic driver, but more and more, it's likely a result of zone pricing.
That investment is beginning to pay off now in zone pricing and assortment clustering capabilities.
A food manufacturer we assisted recently reviewed its zone pricing system.
Under "zone pricing," gasoline distributors charge different wholesale prices--known in industry parlance as the Dealer Tank Wagon (DTW) price--to service stations in different areas.
Zimmer reports Monsanto now uses "zone pricing" for some of its traits.
Wyden's probe showed that the industry engages in zone pricing and discrimination against independently owned gas stations.
As for such pricing activity in America, it raises the question: Does zone pricing offer all consumers a level playing field?
(2) The findings of Basu and Mazumdar (1994) who analyzed the zone pricing plan where the retailer divides the market served into zones based on the cost of delivery, and offers a uniform delivered price to all customers in a given zone.