Question

Clark manufactured housing company charges $500 for deliveries within 50 miles and $800 for deliveries 51 to 100 miles away from their factory. the company is using a ____________ pricing tactic.

Answer 1

The Clark manufactured housing company is using a distance-based pricing tactic where delivery charges are based on the delivery distance from the factory, which helps cover incremental costs and maintain profitability.

Step-by-step explanation:

The Clark manufactured housing company, which charges $500 for deliveries within 50 miles and $800 for deliveries between 51 to 100 miles, is using a distance-based pricing tactic. This pricing strategy involves setting different prices based on the distance goods are delivered from a company's factory or warehouse. It can be akin to a messenger company that adjusts its prices based on factors like gasoline costs, where falling gasoline prices lower delivery costs and allow the company to provide services to a larger area and increase its supply.

Similarly, with Clark manufactured housing company, the increased cost for deliveries over 50 miles likely reflects the additional expenses such as fuel, time, and wear and tear on vehicles for longer distances. This pricing approach can help the company cover these incremental costs and maintain profitability. By contrast, for deliveries closer to the factory, the lower delivery charge can be more competitive, encouraging nearby customers to purchase their homes from Clark, thereby boosting their sales.

Answer 2

This situation is an example of Psychology Pricing. Psychology Pricing refers to an approach of the businessman to encourage the marketers to react on emotional levels rather than logical ones. Like with this problem, the marketers usually attracted to the first number of a price than the last.