Question

How can a company set a relatively similar selling price for its product even though the product is sold in various regions with varying distances?

Answer 1

Geographic Pricing:

The distance between the seller and the buyer is considered in geographical pricing. When there is a lot of distance between the production centre and consumption centre, the producer or marketer can adopt different prices in each area without creating any ill-will among customers.

For example, petrol is priced in this way, depending upon the distance from the storage area to the retail outlet. In other words due to geographical distance, the prices will differ.

Zone Pricing:

In zone pricing, price is equal in the same zone. Market for a product is divided into various zones say south zone, north zone etc. and the price quoted will be the same in a particular zone irrespective of the differences in the distances in the same zone. In other words, prices are uniform within a zone.