This activity is important because as marketing managers set final prices, they start with the list (quoted) price and then make price adjustments to this price as they determine the final price. Wholesalers adjust the list price charged to retailers in the same way that retailers adjust the list price charged to consumers.

The goal of this exercise is to identify examples of the three main types of special price adjustments: discounts, allowances, and geographical adjustments.

Classify each price adjustment strategy as a discount, allowance, or geographical adjustment.

1. To encourage Walmart to stock and carry pool chemicals as early as February, hth Pool Supplies offers Walmart a reduced pallet price on all of its chlorine and shock products for orders delivered before February 15.

(Click to select) Allowance Discount Geographical Adjustment

2. In many global trade transactions, the manufacturer prices the product at the point the product is loaded for shipping. The buyer has the ability to choose the method of shipping and must cover all shipping and handling costs.

(Click to select) Geographical Adjustment Allowance Discount

3. Raquel has been married almost 20 years and desires a bigger engagement diamond ring. Since her initial diamond was purchased at Jared, she is able to trade in her old ring and receive credit for its initial retail price toward the purchase of her new ring.

(Click to select) Geographical Adjustment Allowance Discount

4. Nike charges consumers $18 for a three-pack of Mens Dri-FIT crew socks and $24 for a six-pack of Mens Dri-Fit crew socks. When Joshua compared prices on the two packages of socks, he decided to purchase the six-pack since he was saving $2 per pair.

(Click to select) Geographical Adjustment Allowance Discount

5. To get Safeway to feature Capri Sun Juice Drink in a front-of-store feature, Capri Sun offered Safeway a free case of product for every 15 cases it ordered for the display.

(Click to select) Allowance Discount Geographical Adjustment

6. Amazon offers its Prime members free two-day shipping with their Prime membership on thousands of products, regardless of where the customer lives.

(Click to select) Allowance Discount Geographical Adjustment