Questions and Answers
What are quantity discounts offered for?
What are cumulative quantity discounts?
Discounts that apply to purchases over a given period and increase as the amount purchased increases.
What are noncumulative quantity discounts?
Discounts that apply only to individual orders and encourage larger orders without tying the buyer to the seller.
What are seasonal discounts?
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What does 'net' mean in a payment context?
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What are cash discounts?
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What is another name for a trade discount?
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What is everyday low pricing?
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What is an advertising allowance?
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What is another name for a stocking allowance?
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What are push/prize money allowances also known as?
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What is a trade-in allowance?
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Study Notes
Discount Policies
- Quantity Discounts: Incentives for customers to make larger purchases, driving bulk buying behavior.
- Cumulative Quantity Discounts: Discounts that accumulate over a specific period, increasing with the total amount purchased, promoting ongoing customer loyalty.
- Noncumulative Quantity Discounts: Apply to individual transactions only, encouraging larger single orders without long-term commitment from buyers.
Timing and Pricing Discounts
- Seasonal Discounts: Offered to motivate purchases earlier than immediate demand, helping manage inventory and optimize sales throughout the year.
- Net Terms: Full payment for the invoice is expected immediately, indicating a quick turnaround in transaction completion.
- Cash Discounts: Price reductions that incentivize quicker bill payments, aiding in cash flow management for businesses.
Trade and Promotional Allowances
- Trade Discount: A functional price reduction provided to channel members for services they will deliver; also known as "functional discount."
- Everyday Low Pricing: Strategy prioritizing consistent low prices instead of relying on sporadic sales, fostering predictable pricing for consumers.
- Advertising Allowance: Reductions in price provided to firms within the distribution channel to motivate them to promote supplier products.
Shelf Space and Sales Incentives
- Stocking Allowance: Also referred to as "slotting," this is a financial incentive offered to intermediaries to secure shelf space for new products.
- Push/Prize Money Allowances: Known as PMs or spiffs, these allowances are provided to retailers to reward salesclerks for actively promoting specific items.
- Trade-in Allowance: A price reduction offered when consumers exchange used products for new ones, encouraging upgrades and repeat purchases.
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Description
Test your understanding of discount and allowance policies with these flashcards. Learn key concepts such as quantity discounts, cumulative and noncumulative discounts to enhance your knowledge in sales strategies.
