Most price structures have a basic list price from which various discounts and allowances are subtracted. Discounts (not to be confused with discount selling) are reductions from the list price that are given by a seller to a buyer who either gives up some marketing function or provides the function himself. Several types of discounts are commonly used, including:

a) Cumulative quantity discounts

b) Noncumulative quantity discounts

c) Seasonal discounts

d) Cash discounts

e) Trade (functional) discounts

Allowances are like discounts. They are either given to final consumers, or to customers or channel members for doing something or accepting less of something. Different types of allowances include:

a) Advertising allowances

b) Push money or prize money allowances

c) Tradein allowances

d) Stocking allowances

While many firms give discounts and allowances as a matter of custom, they should be viewed as highly useful tools for marketing strategy planning. As outlined in the text, each type is designed for a specific purpose. Thus, some firms offer buyers a choice of several discounts and allowances.

Question:

Do discounts and allowances really offer marketing managers a great deal of flexibility in varying their marketing mixes? Explain.

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