THE PRODUCT

• A product is anything that can be offered to a

market to satisfy a want or need.
• Most important element of marketing mix
• A company’s best people and systems should be
devoted to developing, producing and making
products available to customers.
• ‘A product is anything that can be offered to a
market for attention, acquisition, use or
consumption that might satisfy a want or need’ –
PHILIP KOTLER
• Products include more than just tangible
goods. Broadly defined, products include
physical objects, services, persons, places,
organisations, ideas or mixes of these entities
• Services are a form of products that consist of
activities, benefits or satisfaction offered for
sale that are essentially intangible and do not
result in the ownership of anything. Example:
Banking, hotel, tax preparation etc.
 PRODUCT LEVELS
• In planning its market offering, the marketer
needs to think through five levels of the
product.
• Each level adds more customer value, and the
five constitute a customer value hierarchy.
• The five levels are: i) Core product (ii) Basic
product (iii) Expected product (iv) Augmented
product and (v) Potential product.
• (1) Core Product/ Core Benefit: the fundamental
service or benefit that the customer is really
buying.
• The core product answers the question : ‘ What is
the buyer really buying’. For instance, a women
buying a washing machine is buying comfort and
not just a mere collection of drum, heater and
nuts & bolts for their own sake and a women
buying lipstick is buying hope and not a set of
chemicals and colours for their own sake.
• The basic job of a marketer is to sell the core
benefits.
• 2)Basic product: the marketer turns the core benefits
into a basic product.
• 3) Expected product: a set of attributes and conditions
buyers normally expect when they purchase this
product.
• The basic and expected product makes a ‘formal’ or
‘tangible product’.
• To differentiate its product from all others, the firm
names it ( branding), packs it, puts additional features
– like laminated top, a stand or a water tap on the door
of the refrigerator to give a distinctive appeal. This
makes a ‘core product’ a tangible or formal product.
• The tangible product broadly posses 5 characteristics
comprising i) quality level (ii) features (iii) style (iv)
brand and (v) packaging.
• 4) Augmented product: the marketer prepares an augmented
product that exceeds customer expectations.
• The product augmentation is a set of approaches followed by a
company in promoting its product through effective delivery and
service, incentives to customers and dealers, warranty to seek
customer’s confidence on product.
• In other words the intangible components of the product along
with the tangible and core components is called ‘augmented
product’
• Today’s competition essentially takes place at the product
augmentation level. ( in less developed countries, competition takes
place mostly at the expected product level).
• According to Levitt: The new competition is not between what
companies produce in their factories, but between what they add
to their factory output in the form of packaging, services,
advertising, customer advice, financing, delivery arrangements,
warehousing and other things that people value.
• 5) Potential product: encompasses all the
possible augmentations and transformations
that the product might undergo in the future.
• Companies search for new ways to satisfy
customers and distinguish their offer.
• (successful companies add benefits to their
offering that not only satisfy customers but
also surprise and delight them.) “ the best way
to hold customers is to constantly figure out
how to give them more for less”.
 PRODUCT MIX
• The number of products carried by a firm at a given
point of time is called its product mix.
• The set of all products that an organisation makes
available to customers.
• It is the total set of brands marketed by the company.
• “A brand is a name, term, sign, symbol or design or a
combination of them, intended to identify the goods
and services of one seller or a group of sellers and to
differentiate them from those of competitors.”
• .
• One of the realities of business is that most
companies deal with multiple products . This
helps the firm to diffuse its risk across
different products groups. Also it enables the
firm to appeal to a much larger group of
customers or to different needs of the same
customer group
• Product item is a specific version of a product that is
designated as a distinct offering from a company. Most
often a company brands each of its product items. Mach 3
is a product item from Gillette.
• A product line is a group of product items or brands that
are closely related in terms of their functions and benefits
they provide.
• A product line refers to a group of products clubbed
together by virtue of satisfying a particular class of needs,
being used together, being distributed through the same
channel or possessing common physical or technical
characteristics.
• Godrej has several product lines – furniture, toiletries,
locks, typewriters, refrigerators, computers etc.
• Gillette’s product line includes blades and razors, toiletries,
and writing instruments.
• The depth of a product line is the number of
product items or brands and variations (like
size, packaging, colors etc) it contains.
• Gillette’s razor & blade product line include
brands like MACH 3, Sensor, Trac III, Atra, etc.
• Companies increase the depth i.e. add more
brands to their product lines to attract more
buyers with different preferences and to
increase sales by further segmenting the
market.
• The width of a product mix is the number of
product lines that a company offers.
Companies increase the width of their product
mix to spread their risk over many product
lines rather than depend on one or a few of
them.
• They also widen their product mix to capitalize
on their established brand equity.
 Product classification
• Products can also be classified based on whether they
are used by consumers or businesses.
• Consumer products can be further categorized into
shopping products, convenience products, specialty
products and unsought products
• Consumer products: Those products purchased by
households and individuals for their own private
consumption.
• Business-to-business products: Those products
purchased by individuals and organisations for use in
the production of other products or for use in their
daily business operations.
 On the basis of Durability and
Tangibility

• Nondurable goods- tangible goods normally

consumed in one or few uses.
• Durable goods – tangible goods that normally
survive many uses.
• Services – intangible and perishable products.
CONSUMER – GOODS CLASSIFICATION

• Convenience products (fast-moving consumer

goods): Inexpensive, frequently purchased
consumer products that are bought with little
engagement in the decision-making process.
-further divided into STAPLES, IMPULSE and
EMERGENCY GOODS
• Shopping products: Consumer products that
involve moderate to high engagement in the
decision making process, with the purchase
decision being based on consideration of
features, quality and price.
 Consumer goods …
• Specialty products: Highly desired products
with unique characteristics that consumers
will make considerable effort to obtain.
• Unsought products: Products purchased to
solve a sudden, unexpected need. Are those
the consumer does not know about or does
not normally think of buying –smoke
detectors. Known but unsought – life
insurance , encyclopedia
 PRODUCT STRATEGY
• The conscious firm lays specific stress on the role of the product
strategy so that it can derive the maximum benefit from its
productive efforts.
• The variable set under the strategy is given below:
1) Attributes & Operations of the product: the attributes catch the
attention of the customers first. In this packaging has a good role
to play. ( baby products, toys etc).
- Convenience of handling is an essential aspect of a product.
This is mostly the case with electrical goods. Here if some aspects
are complicated it is the duty of the firm to provide the relevant
information through booklets, demonstrations, instructions etc.
2) Uniqueness of the product: it should leave an impact on the
customer and build an image in the market.
 PRODUCT STRATEGY
• 3) How lasting the product is?
The third area in the strategy is to go for a
procedure that makes the product long
lasting. The firms should be prepared in
advance so that its products do not retire from
the market.
4) Sound management of the product
5) The innovative sprit
6) Quality
 PRODUCT LIFE CYCLE
• The Product Life Cycle
A new product progresses through a sequence of
stages from introduction to growth, maturity, and
decline. This sequence is known as the product
life cycle and is associated with changes in the
marketing situation, thus impacting the
marketing strategy and the marketing mix.
• The product revenue and profits can be plotted
as a function of the life-cycle stages as shown in
the graph :
Product Life Cycle Diagram
• Introduction Stage
• In the introduction stage, the firm seeks to build product awareness
and develop a market for the product. The impact on the marketing
mix is as follows:
• Product branding and quality level is established, and intellectual
property protection such as patents and trademarks are obtained.
• Pricing may be low penetration pricing to build market share
rapidly, or high skim pricing to recover development costs.
• Distribution is selective until consumers show acceptance of the
product.
• Promotion is aimed at innovators and early adopters. Marketing
communications seeks to build product awareness and to educate
potential consumers about the product.
•
 Introduction Stage. . .

• At the Introduction (or development) Stage market size

and growth is slight. It is possible that substantial
research and development costs have been incurred in
getting the product to this stage.
• In addition, marketing costs may be high in order to
test the market, undergo launch , promotion and set
up distribution channels.
• It is highly unlikely that companies will make profits on
products at the Introduction Stage. Products at this
stage have to be carefully monitored to ensure that
they start to grow. Otherwise, the best option may be
to withdraw or end the product.
Growth Stage

• In the growth stage, the firm seeks to build brand

preference and increase market share.
• Product quality is maintained and additional
features and support services may be added.
• Pricing is maintained as the firm enjoys
increasing demand with little competition.
• Distribution channels are added as demand
increases and customers accept the product.
• Promotion is aimed at a broader audience.
 Growth Stage...
• The Growth Stage is characterised by rapid
growth in sales and profits. Profits arise due to
an increase in output (economies of scale)and
possibly better prices.
• At this stage, it is cheaper for businesses to
invest in increasing their market share as well
as enjoying the overall growth of the market.
Accordingly, significant promotional resources
are traditionally invested in products that are
firmly in the Growth Stage.
Maturity Stage

• At maturity, the strong growth in sales diminishes.

Competition may appear with similar products. The
primary objective at this point is to defend market
share while maximizing profit.
• Product features may be enhanced to differentiate the
product from that of competitors.
• Pricing may be lower because of the new competition.
• Distribution becomes more intensive and incentives
may be offered to encourage preference over
competing products.
• Promotion emphasizes product differentiation.
• Maturity Stage
• The Maturity Stage is, perhaps, the most
common stage for all markets. it is in this stage
that competition is most intense as companies
fight to maintain their market share. Here, both
marketing and finance become key activities.
Marketing has to be monitored carefully, since
any significant moves are likely to be copied by
competitors. The Maturity Stage is the time when
most profit is earned by the market as a whole.
Any expenditure on research and development is
likely to be restricted to product modification and
improvement and perhaps to improve production
efficiency and quality.
• Decline Stage
• As sales decline, the firm has several options:
• Maintain the product, possibly rejuvenating it by adding
new features and finding new uses.
• Harvest the product - reduce costs and continue to offer it,
possibly to a loyal niche segment.
• Discontinue the product, liquidating remaining inventory or
selling it to another firm that is willing to continue the
product.
• The marketing mix decisions in the decline phase will
depend on the selected strategy. For example, the product
may be changed if it is being rejuvenated, or left
unchanged if it is being harvested or liquidated. The price
may be maintained if the product is harvested, or reduced
drastically if liquidated.
•
• Decline Stage
• In the Decline Stage, the market is shrinking, reducing
the overall amount of profit that can be shared
amongst the remaining competitors. At this stage,
great care has to be taken to manage the product
carefully. It may be possible to take out some
production cost, to transfer production to a cheaper
facility, sell the product into other, cheaper markets.
Care should be taken to control the amount of stocks
of the product. Ultimately, depending on whether the
product remains profitable, a company may decide to
end the product.
 EXAMPLES
• INTRODUCTION
• Third generation mobile phones
• E-conferencing
• All-in-one racing skin-suits
• iris-based personal identity cards
• GROWTH
• Portable DVD Players
• Email
• Breathable synthetic fabrics
• Smart cards
• EXAMPLES

• MATURITY
• Personal Computers
• Faxes
• Cotton t-shirts
• Credit cards

• DECLINE
• Typewriters
• Handwritten letters
• Shell Suits
• Cheque books
• DECLINE
• Typewriters
• Handwritten letters
• Shell Suits
• Cheque books
• Strategies for the differing stages of the Product Life Cycle.
• Introduction.
• The need for immediate profit is not a pressure. The product is promoted to create
awareness. If the product has no or few competitors, a skimming price strategy is
employed. Limited numbers of product are available in few channels of
distribution.
• Growth.
• Competitors are attracted into the market with very similar offerings. Products
become more profitable and companies form alliances, joint ventures and take
each other over. Advertising spend is high and focuses upon building brand.
Market share tends to stabilise.
• Maturity.
• Those products that survive the earlier stages tend to spend longest in this phase.
Sales grow at a decreasing rate and then stabilise. Producers attempt to
differentiate products and brands are key to this. Price wars and intense
competition occur. At this point the market reaches saturation. Producers begin to
leave the market due to poor margins. Promotion becomes more widespread and
use a greater variety of media.
• Decline.
• At this point there is a downturn in the market. For example more innovative
products are introduced or consumer tastes have changed. There is intense price-
cutting and many more products are withdrawn from the market. Profits can be
improved by reducing marketing spend and cost cutting.
• Problems with Product Life Cycle.
• In reality very few products follow such a
prescriptive cycle. The length of each stage varies
enormously. The decisions of marketers can
change the stage, for example from maturity to
decline by price-cutting. Not all products go
through each stage. Some go from introduction
to decline. It is not easy to tell which stage the
product is in. Remember that PLC is like all other
tools. Use it to inform your gut feeling.
 New product development
The new product development process:
1. Idea generation
2. Screening
3. Concept evaluation
4. Marketing strategy
5. Business analysis
6. Product development
7. Test marketing
8. Commercialisation
 The new product development (NPD) process is generally
characterised as consisting of eight steps viz:
1. Idea generation
Use of various brainstorming activities as well as speaking
to customers, company staff, distributors and the use of
R&D and market intelligence.
2. Idea screening
• New ideas must be screened to determine how promising
the ideas are. Criteria used to evaluate ideas include:
• i. does the market care? (identify consumer benefits and
market potential)
• ii. is it important to the organisation? (does it fit company
strategy and goals?; will it create shareholder value?; how
much market share will it achieve?; does it provide a
competitive advantage?)
• iii. does it fit with organisational capabilities?
 3. Concept development
• Sound ideas need to be developed into product
concepts and then tested with the appropriate target
group
4. Marketing strategy development
• Consists of three elements:
• i. analysis of the target market’s size, structure and
behaviour; the planned product positioning; and the
sales, market share and profit goals in the early years;
• ii. the product’s planned price, distribution strategy
and marketing budget for the first year;
• iii. the long run sales and profit goals and marketing-
mix strategy over time.
5. Business analysis
• Analyses whether the strategy will be a good fit with
company’s overall business objectives and the profit
potential.
6. Product development
• At this stage the product requires a large increase in
investment as it continues to go through functional and
consumer tests.
7. Market testing
• The product will go through a variety of testing: sales
research and controlled test marketing.
8. Commercialisation
• Assuming the product has made it thus far,
management can now decide whether to launch the
product.
 Product innovation and Diffusion
• Diffusion of Innovations is a theory that seeks to
explain how, why, and at what rate new ideas and
technology spread through cultures.
• It describes the behaviour of consumers as they
purchase new products and services.
• It is the process by which an innovation is
communicated through certain channels over
time among the members of a social system.
• The individual categories of innovator, early
adoptor, early majority, late majority and laggards
are described below.
 Innovators
• Innovators are the first individuals to adopt an
innovation. Innovators are willing to take risks,
youngest in age, have great financial lucidity, very
social and have closest contact to scientific sources and
interaction with other innovators. Risk tolerance has
them adopting technologies which may ultimately fail.
Financial resources help absorb these failures
• Innovators display behaviour that demonstrates that
they likely to want to be ahead, and to be the first to
own new products, well before the average consumer.
They are often not taken seriously by their peers. The
often buy products that do not make it through the
early stages of the Product Life Cycle (PLC).
 Early Adopters
• This is the second fastest category of individuals who adopt
an innovation. These individuals have the highest degree of
opinion leadership among the other adopter categories.
Early adopters are typically younger in age, have a higher
social status, have more financial lucidity, advanced
education, and are more socially forward than late
adopters. More discrete in adoption choices than
innovators. Realize judicious choice of adoption will help
them maintain central communication position.
• Early adoptors are also quick to buy new products and
services, and so are key opinion leaders with their
neighbours and friends as they tend to be amongst the first
to get hold of items or services.
 Early Majority
• Individuals in this category adopt an innovation after a
varying degree of time. This time of adoption is
significantly longer than the innovators and early
adopters. Early Majority tend to be slower in the
adoption process, have above average social status,
contact with early adopters, and seldom hold positions
of opinion leadership in a system
• The early majority look to the innovators and early
majority to see if a new product or idea works and
begins to stand the test of time. They stand back and
watch the experiences of others. Then there is a surge
of mass purchases
 Late Majority
• Individuals in this category will adopt an
innovation after the average member of the
society. These individuals approach an innovation
with a high degree of skepticism and after the
majority of society has adopted the innovation.
Late Majority are typically skeptical about an
innovation, have below average social status, very
little financial lucidity, in contact with others in
late majority and early majority, very little
opinion leadership
 Laggards
• Individuals in this category are the last to adopt an innovation.
Unlike some of the previous categories, individuals in this category
show little to no opinion leadership. These individuals typically have
an aversion to change-agents and tend to be advanced in age.
Laggards typically tend to be focused on “traditions”, likely to have
lowest social status, lowest financial fluidity, be oldest of all other
adopters, in contact with only family and close friends, very little to
no opinion leadership
• laggards tend to very late to take on board new products and
include those that never actually adopt at all. Here there is little to
be made from these consumers.
• There are a number of examples of products that have gone
through the adoption process. They include Ipods or DVD players
(or even video players and digital watches).
 Price

• Price
– The value that the buyer gives in exchange
for the product in a marketing transaction.
– Price is directly related to profitability:
Profit = (price x sales volume) - total costs
– Price is a major determinant of sales
volume. In turn, sales volume influences
costs, both per unit sold, and the production
cost of each unit.
“YOU DON’T SELL THROUGH PRICE.
YOU SELL PRICE.”
•Price is an important indicator determining how
much of the quantity will be bought.
•Price is the monetary value of a product or service.
•Price is the marketing mix element that produces
revenue; the others produce costs.
•Price is one of the most flexible element; it can be
changed quickly, unlike other elements.
Pricing Rests on Value; Capturing Value is Its Purpose

Pricing, a Complex Task; There is a Science Side and an

Art Side to It
In Pricing we need scientific approaches/ metrics as well as
intuition/ judgement

Role and Importance of Pricing

Whether the firm opts for Price route or Differentiation route in
Strategy, Pricing remains a crucial decision area

Factors Influencing Pricing

Internal factors
External factors
•In both sets, some factors are economic and some psychological
UTILITY, VALUE, PRICING AND PRICE

• Utility: is the want satisfying capacity of an item or the attribute of

an item that makes it capable of want satisfaction.

•Value: is the quantitative measure of the worth of a product.

•On the quantitative side, value is the actual gain
measured in terms of financial numbers, percentages,
and dollars. For an organization to deliver value, it has to
improve its value : cost ratio. When an organization
delivers high value at high price, the perceived value
may be low.

•Pricing: is the art of translating into monetary terms the value of the
product to the consumers at a particular time.

•Price: is the amount of money that is needed to acquire some

combination of a product and its accompanying services.
IMPORTANCE OF PRICING

•1) FOR THE ECONOMY: Price is the basic regulation of the

economic system because it influences the allocation of the
factors of production.
In other words the price of the product is influenced by the
price of the factors of production.

LAND LABOUR CAPITAL ENTREPRENEURSHIP

RENT WAGES INTEREST PROFITS

 IMPORTANCE OF PRICING
•2) Price is a major determinant of the product’s demand.
( elastic / inelastic)
•3) FOR THE FIRM: Price affects a firm’s competitive position
and its share of the market.
price of a product also affects the firm’s marketing program.
Whether the market will accept higher price to have more
improved products.
Pricing Decisions

Two sets of factors—internal and external—influence pricing

decisions.
Internal Factors:
• Corporate and marketing objectives of the firm,
• characteristics of the product,
• costs of manufacturing and marketing etc.
External Factors:
• Conditions of the economy,
• nature and intensity of competition,
• purchasing power of consumers,
• their bargaining powers,
• Government regulations, etc.
 Pricing Strategy

• Pricing method, or Pricing strategy, refers to the route taken by the firm
in fixing the price. Several methods are available for pricing.

• Pricing is an important strategic issue because it is related to

product positioning.

• Furthermore, pricing affects other marketing mix elements such as

product features, channel decisions, and promotion.

• While there is no single recipe to determine pricing, the following is

a general sequence of steps that might be followed for developing
the pricing of a new product:

1. Develop marketing strategy - perform marketing analysis,

segmentation, targeting, and positioning.
2. Make marketing mix decisions - define the product, distribution, and
promotional tactics.
3. Estimate the demand curve - understand how quantity demanded
varies with price.
4. Calculate cost - include fixed and variable costs associated with the
product.
5. Understand environmental factors - evaluate likely competitor actions,
understand legal constraints, etc.
6. Set pricing objectives - for example, profit maximization, revenue
maximization, or price stabilization (status quo).
7. Determine pricing - using information collected in the above steps,
select a pricing method, develop the pricing structure, and define
discounts.
These steps are interrelated and are not necessarily performed in the above
order. Nonetheless, the above list serves to present a starting framework.
 NINE PRICE QUALITY STRATEGIES (Positioning)

PRICE
HIGH MEDIUM LOW
1 PREMIUM 2 HIGH- VALUE 3 SUPER-VALUE
Q HIGH STRATEGY STRATEGY STARTEGY
U
A 4 OVERCHARGING 5 MEDIUM-VALUE 6 GOOD-VALUE
L MEDIUM STARTEGY STARTEGY STARTEGY
I
T 7 RIP-OFF 8 FALSE ECONOMY 9 ECONOMY
Y STARTEGY STARTEGY STARTEGY
LOW
NINE PRICE QUALITY STRATEGIES

•The firm must decide where to position its product on quality

and price ( placing the product in value-map)

•There can be competition between price quality segments (

nine strategies are possible)

•In the figure, the strategies 1, 5 &9 can all coexist in the same
market (products fall on value equivalence line of the value-
map). Strategies 2,3 &6 are ways to attack the diagonal
positions ( products fall in value advantage area). Positioning
strategies 4, 7 &8 amount to over pricing the product in relation
to its quality ( positioned in value disadvantaged area).
An organisation can adopt a number of pricing strategies. The pricing strategies are
based much on what objectives the company has set itself to achieve
Pricing
Definition Example
Strategy

Here the organisation sets a

A television satellite
low price to increase sales
company sets a low price to
Penetration and market share. Once
get subscribers then
pricing: market share has been
increases the price as their
captured the firm may well
customer base increases.
then increase their price.
 The organisation sets an
initial high price and then A games console company
slowly lowers the price to reduces the price of their
Skimming make the product available console over 5 years, charging
pricing: to a wider market. The a premium at launch and
objective is to skim profits lowest price near the end of
of the market layer by its life cycle.
layer.
 Setting a price
in comparison
with
competitors.
Really a firm Some firms offer a price
Competition has three matching service to match
pricing options and what their competitors are
these are to offering.
price lower,
price the same
or price
higher
 An example would be a DVD
manufacturer offering
Pricing different DVD recorders with
different different features at different
products prices. Example, A HD and
Product Line within the non HD version.. The greater
Pricing: same product the features and the benefit
range at obtained the greater the
different price consumer will pay. This form
points. of price discrimination assists
the company in maximising
turnover and profits.
 This strategy is very
popular with
supermarkets who often
offer BOGOF strategies.
The organisation bundles a group
of products at a reduced price.
Bundle Common methods are buy one and
Pricing: get one free promotions or
BOGOF's as they are now known.
 The seller will therefore
charge 99p instead Rs1 or
The seller here
Rs199 instead of Rs200.
will consider the
The reason why this
Psycholo psychology of
methods work, is because
gical price and the
buyers will still say they
pricing: positioning of
purchased their product
price within the
under Rs200 , even though
market place
it was a rupee away.
(favourite pricing strategy).
 The price set
An example of products
is high to
Premium using this strategy would be
reflect the
pricing Harrods, first class airline
exclusiveness
services, Porsche etc.
of the product.
 The
organisation
sells optional
This strategy is used
Optional extras along
commonly within the car
pricing: with the
industry .
product to
maximise its
turnover.
 The firms takes into
account the cost of If a firm operates in a very
production and volatile industry, where costs
distribution, they then are changing regularly no set
Cost Based
decide on a mark up price can be set, therefore the
Pricing:
which they would like firm will decide on their
for profit to come to mark up to confirm their
their final pricing pricing decision.
decision.
 Here the firm add
For example it may cost
Cost a percentage to
Rs. 100 to produce a Pen and
Plus costs as profit
the firm add 20% as a profit
Pricing: margin to come to
margin so the selling price
their final pricing
would be Rs.120.00
decisions.
 Price Discounts

The normally quoted price to end users is known as the

list price. This price usually is discounted for distribution
channel members and some end users. There are
several types of discounts, as outlined below.

•Quantity discount - offered to customers who purchase

in large quantities.

•Cumulative quantity discount - a discount that

increases as the cumulative quantity increases.
Cumulative discounts may be offered to resellers who
purchase large quantities over time but who do not wish
to place large individual orders.
• Seasonal discount - based on the time that the purchase is made and
designed to reduce seasonal variation in sales. For example, the travel
industry offers much lower off-season rates. Such discounts do not have
to be based on time of the year; they also can be based on day of the
week or time of the day, such as pricing offered by long distance and
wireless service providers.

•Cash discount - extended to customers who pay their bill before a

specified date.

•Trade discount - a functional discount offered to channel members for

performing their roles. For example, a trade discount may be offered to a
small retailer who may not purchase in quantity but nonetheless
performs the important retail function.

•Promotional discount - a short-term discounted price offered to

stimulate sales.