Theme: determining monetary and nonmonetary

incentives and disincentives

TOPIC 8
At the end of this presentation, the students
should be able to:

 Price: The second “P”

 Determining monetary and non-monetary incentives
and disincentives and disincentives
 Setting price for tangible objects and services
Definition “Price”
Price is the cost that the target market associates with
adopting the desired behavior. Traditional marketing theory
has a similar definition: “The amount of money charged for a
product or service, or the sum of the values that consumers
exchange for the benefits of having or using the product or
service (Bueckert, 2007).
Tactics in determining monetary and
nonmonetary incentives and disincentives

Increase monetary benefits for the desired behavior.

Decrease monetary costs for the desired behavior.
Increase nonmonetary benefits for the desired behavior.
Decrease nonmonetary costs for the desired behavior.
Increase monetary costs for the competing behavior.
Increase nonmonetary costs for the competing behavior.
i. Increase monetary benefits for the desired behavior.

 As an appreciation to the target adopters for adopting the

desired behaviour.
 Rebates, allowances, cash incentives, price adjustments.
Examples;
 3.5 cent credit for reusing grocery bags
 Quit and win contests that offer a chance to win a $1000
prize for successfully stopping smoking for at least 1
month.
ii. Decrease monetary costs for the desired
behavior.
 Reduction of the monetary costs to encourage the desired behaviour.
 Discount coupons, cash discounts, seasonal discounts, promotional
pricing (a temporary price reduction) etc.
Examples;
 Received a discount parking at work because you are part of a
carpool.
 In 1985, Harbourview Injury Prevention and Research Centre’s had
distributed discount coupons cut helmet prices by half. 7 years later,
helmet use had jumped from 1% to 57% among children and adult.
iii. Increase nonmonetary benefits for the desired
behavior.
 To provide recognition and/or appreciation acknowledging the
adoption of a desired behaviour.
Examples;
 An e-mail from a supervisor thanking an employee for signing up for a
carpool.
 An announcement made by the Chief Minister advertised in the
newspaper the most clean and dengue free area.
 However, these nonmonetary benefits are distinct from tangible
objects, service or sales promotion tactics that are more similar in
nature to gifts or prizes (e.g; t-shirts and coffee mugs)
iv. Decrease nonmonetary costs for the desired
behavior.
 Tactics available for decreasing time, effort, physical or psychological
costs.
Examples;
 People might be encouraged to floss their teeth while they watch
television.
 Working mothers are suggested to create their own schedule to
breastfeed their babies.
 A free trial of a product, so that the target audience can experience
how the product does.
v. Increase monetary costs for the competing
behavior.
 Monetary strategies against competing behaviour.
 This tactics is likely to involve influencing policymakers / local authority
concerned.
Examples;
 Imposing fines for not recycling / smoking at public places.
 Decreasing funding if a school doesn’t offer an hour of physical
education class.
 Discouraging Use of Plastic Bags in Ireland; shoppers were imposed tax
of 15 euro per bag, resulted to a decrease of use by 95%. The tax
raised 75 million euros used to support environmental projects.
vi. Increase nonmonetary costs for the competing
behavior.
 Nonmonetary tactics used to increase actual or perceived
nonmonetary costs associated with choosing the competing
behaviour.
 Creating/emphasizing negative public recognition.
Examples;
 In Tacoma, Washington; an announcement made in a web site that
features properties not in full compliance with municipal codes.
Although property owners’ names do not appear on the web site, but
it does includes photos of the building.
 Social media campaign to promote the importance of avoiding drugs
and other related implications to it.
Setting prices for tangible objects and services –
potential objectives

Maximizing retained earnings

Recovering cost
Maximizing the number of target adopters
Social equity
Demarketing
Cont’d

Subsequently consider three options:

 Cost-based pricing
 Competitive-based pricing
 Value-based pricing