promotional pricing explained

Promotional pricing is an informed decision by the company to give price discount on particular product or brand & calculations are done in order to assess the feasibility of discount & the time period for which it could be given. Promotional pricing is sometimes a reaction to unforeseen circumstances, as when a downturn in demand leaves a company with excess stocks; or when competitive activity is making inroads into market share or profits. With a promotional price, the consumer receives full access to a product or service at a price that is lower than what the regular or “normal” price happens to be. The goal of promotions is to present your product, increase demand, and differentiate it. All four of these elements combine to make a successful marketing strategy. In other words, it's one type of promotion. Promotional Pricing Definition: Promotional Pricing (or price promotions) is a pricing strategy that involves offering products and services at a reduced price and/or improving the offering with the aim to increase sales and reach more price-sensitive customers. Price Leaders: For a week, the retailer reduced the price of a branded cheese product by ten cents an ounce. PriceBeam posts regular guides, articles and news Let’s assume you’re selling cereal. This strategy is used by the companies only in order to set up their customer base in a particular market. The act of offering a lower price temporarily is to enhance the effectiveness of sales efforts to cost sensitive users. For example, if Person A is licensed for the first app, subsequent pricing wouldn’t apply to Person B. New people enter the market all the time, and some may not have noticed your previous price promotion -- therefore, occasionally applying a promotional pricing strategy does make sense with regards to the sought acquisition of new customers. I dare to say that there isn’t any mature for-profit business on this planet that has never used this pricing strategy. Personal selling consists of a face-to-face presentation in a conversation with a prospective purchaser. You can use multiple types of discounts for the same promotional offer. In the process of creating the marketing plan, managers usually use the 4p’s model (which can also be found as the 5p’s model).The 4P’s model includes price, place, product and promotion (later on the model developed in order to also include people).). 2 User must be licensed for Dynamics 365 Field Service to qualify for reduced pricing. This is the sole purpose of promotional pricing, nothing more. As every industry is different, I can’t give you an exact number of times you should apply the strategy, but the point is you avoid showing a pattern and making it anticipatable. The aim of promotion is to increase awareness, create interest, generate sales or create brand … Dealing with AnticipationChances are your price promotions won’t be a one-time thing. Examples of premium pricing A price promotion is a reduced price that is intended to increase sales. Promotional Pricing Definition | Marketing Dictionary . Premium pricing is a marketing tool to set higher prices for certain goods in the hope that the higher price will give the impression the good is of a higher quality. The pricing procedure defines the valid condition types and the sequence in which they appear in the sales order. Impact on Existing CustomersWhile the goal is to target new customers, promotional pricing will inevitably have an impact on existing customers, too -- those customers that happily bought your cereal at $2.50 and had it everyday for breakfast. Bundled Discount . A price promotion is a reduced price that is intended to increase sales. It's simple! Business planning is all about developing strategies for whatever your business may face. The key elements of a ret ailer promotion are price discounts, t he medium in which price discounts are offered, com munications of sales promoti ons and objectives of the promotion. The definition that many marketers learn as they start out in the industry is: putting the right product in the right place, at the right price, at the right time. Menu . If you’re not sure if you’re doing it too often, you probably are! Why promotional codes work. The correct mix must be created in order to communicate effectively with the target market and produce a sale. When there are incentives involved, we think more about what things are worth. The organization can use any of the dimensions or combination of dimensions to set the price of a product. The 4 Ps of marketing are product, price, place and promotion. Menu. Moreover, a reduced price will negatively impact their willingness to pay: after paying $2.00, going back to paying $2.50 is a bit unpleasant -- especially if price promotions are occurring too frequently, which leads us to the next section. It’s not a secret that all players offer the same service on target automated Instagram account promotion. Learn how Product, Price, Promotion and Place create an effective Marketing Mix. The Promotion is the fourth element of the marketing mix (Viz. But that’s an overreaction -- promotional pricing is, indeed, a viable pricing strategy if you are smart about it. This is the sole purpose of promotional pricing, nothing more. ), and once the stock runs out they will most likely turn to a competitor until your next price promotion. Learn how Product, Price, Promotion and Place create an effective Marketing Mix. Even a humongous firm like Spotify. Well, they probably stock up and buy 5 or 10 boxes (depending on how inconvenient they find storing the products), but their general consumption won’t increase massively. Two-part pricing. Promotional pricing artificially increases a product's value for a sales boost, often reduced by a percentage amount for a limited duration and therefore deemed to be on sale. Prices are based on three dimensions that are cost, demand, and competition. (617) 307-7736  This often increases revenue in the short term at the expense of profit margins. This process implies creating, testing, pricing, and distributing a product. For example, if Person A is licensed for the first app, subsequent pricing wouldn’t apply to Person B. It’s all about strategies and techniques that help communicate a product to the audience. And once such pattern emerges, there is little you can do to repair the damage. Summary: The Do’s and Don’ts of Promotional PricingThis article has primarily focused on what not to do. You can use this kind of pricing when your product or service presents some unique features or core advantages, or when the company has a unique competitive advantage compared to … Geographical Pricing. Promotional Pricing Explanation. Promotional pricing is a way to generate consumer interest in specific products or services that individuals or companies offer. What is marketing? Everyone wants the best product at the lowest price, and it does just that by selling the product effectively, and sealing the deal when it comes to the price. Work on these five P’s of marketing and give your customers what they need at the most convenient time. The premise of the show is value-based and you get to see regular people jump through hoops in the name of guessing the prices of goods. It helps you to define your marketing options in terms of price, product, promotion, and place so that your offering meets a specific customer need or demand. Retailers hope that the influx of new customers will continue when the promotional discounts are removed. Now you want to grow your business by getting more loyal customers -- you need new customers who haven’t tried your product before or tried it a couple of times but didn’t really give it a chance because they were indifferent between your brand and a cheaper option. And once such pattern emerges, there is little you can do to repair the damage. Advertising is any paid form of nonpersonal promotion by an identified sponsor. Sales promotion consists of marketing … Promotional Pricing is a marketing approach to pricing that is often used to clear excess stocks, to generate high-volume sales during a limited period by selling to cost-sensitive customers, and to push sales during the launch of new product lines. They peg their price to a competitor’s. Promotion Create value Pricing “Harvests” value. 30% off Offer Details: Sale with 20% or 30% off etc; Price promotions or promotional pricing is the sales promotion technique which involves reducing the price of a product or services in short term to attract more customers & increase the sales volume. Geographical pricing sees variations in price in different parts of the world. End quantity prices let’s us take advantage of volume buying. Article Shared by Nitisha. Advertising is any paid form of nonpersonal promotion by an identified sponsor. Rural Marketing - Promotion Strategies - Let us now understand the different promotion strategies involved in rural marketing. Go have a look! Also, don’t make sales a goal in itself: remember that the sole goal of promotional pricing is to encourage first-time buyers to take the plunge and make a purchase, so even though it may seem like existing customers increase their overall consumption level, this is rarely a permanent change. ADVERTISEMENTS: An organization has various options for selecting a pricing method. Promotion is a catch-all term that includes all the ways a business can attempt to enhance the visibility of its products, services, or brand. Personal selling consists of a face-to-face presentation in a conversation with a prospective purchaser. People; Process; Physical Evidence ; S.A.V.E Marketing – Update To The 4P’s & 7P’s; The Marketing Mix 4P’s and 7P’s Explained. 1. Promotional pricing is widely used both by manufacturers & retailers to gain market share & … ADVERTISEMENTS: An organization has various options for selecting a pricing method. Well, they probably stock up and buy 5 or 10 boxes (depending on how inconvenient they find storing the products), but their general consumption won’t increase massively. Provide people with useful information. Thus, most promotions are temporary. related to pricing and strategy. Prices are based on three dimensions that are cost, demand, and competition. For example France telecom gave away free telephone connections to consumers in order to grab or … It is likewise named as On Sale estimating. Through it, you let potential customers know what you are selling. A good salesperson is the one who has thorough knowledge about the product he is about to sell and tries to strike a common point of link between the product and the customer needs. Search 1000+ Promotional Video Ads . Promotional pricing is often the subject of controversy. Promotional pricing is a way to generate consumer interest in specific products or services that individuals or companies offer. It’s in any businessman’s nature to occasionally lower the price or offering a better deal in some capacity, to reel in those price-sensitive customers and hopefully turn them into loyal customers willing to pay the full price. End quantity prices let’s us take advantage of volume buying. Instead, you should look at how a price promotion impacts your long-term sales in the period, Article Series 1: Using WTP for Price Optimization. Big Mac's Lessons on Global Economics and Your Pricing Strategy, Lessons from the Failure of J.C. Penney’s New Pricing Strategy, Innumeracy: How Your Pricing Strategy can take Advantage of Mathematical Ignorance. Communication; Consumer; Convenience; Cost; The Marketing Mix 7P’s Menu Toggle. Lower your price occasionally to reel in new customers, but don’t make it a habit. At the end of the day, that’s what really counts. Include the results of your assessment in the company description portion 11 different types of pricing 1) Premium pricing . It is a type of pricing which involves establishing a price higher than your competitors to achieve a premium positioning.You can use this kind of pricing when your product or service presents some unique features or core advantages, or when the company has a unique competitive advantage compared to its rivals. Manufacturers of loss-leader brands typically object because this practice can dilute the brand image and bring complaints from retailers who charge the list price. 4 Types of Pricing Methods – Explained! While the goal is to target new customers, promotional pricing will inevitably have an impact on existing customers, too -- those customers that happily bought your cereal at $2.50 and had it everyday for breakfast. If you’re not sure if you’re doing it too often, you probably are! So, promotion is the basic element of marketing. Sales promotion consists of marketing … Meaning. The goal of promotions is to present your product, increase demand, and differentiate it. They use methods such as cost plus a fixed margin. It's simple! PriceBeam's offers scientific as well as fast and cost-effective price research. Amongst all the fun is a valuable lesson in how we as human interact with value. Promotional pricing is all about reaching this segment -- you want to give them another shot at trying your brand by decreasing the risk of trying your product. A typical cheese promotion offers a good example. The Promotional Pricing is a sales promotion technique, wherein the firm reduces the price of a product drastically, but for a short period of time. Not one. When there are incentives involved, we think more about what things are worth. For some products with more sporadic purchase patterns, such as snacks, drinks and delicacies the general consumption level among existing customers will increase slightly, but not enough to make promotional pricing profitable when looking at existing customers in isolation as their price elasticity of demand is almost always inelastic. . The words "promotion" and "advertising" may be used interchangeably, but they're not the same thing. As the perceived purchase risk is low, if the customer demands such a low price (i.e. Subsequent pricing for tenant-based apps applies to any tenant in your organization. This often increases revenue in the short term at the expense of profit margins. Premium pricing may be applied to similar goods, where there is a slight increase in quality. Noting pricing codes after listed production time: “Production time, 15 working days/p.” Printing a separate pricing card so that the distributor can remove it from the catalog. Subsequent pricing for tenant-based apps applies to any tenant in your organization. Promotional pricing is a temporary measure that involves setting prices at levels lower than normally charged for a good or service. Before you can understand A2BC, there is … The key elements of a ret ailer promotion are price discounts, t he medium in which price discounts are offered, com munications of sales promoti ons and objectives of the promotion. Perhaps you've heard of the four Ps of marketing: product, price, place, and promotion. It is a type of pricing which involves establishing a price higher than your competitors to achieve a premium positioning. Promotional Pricing: A Simple Pricing Strategy Everyone Screws Up, First, let’s take a step back and consider what it is you want to achieve with your promotional pricing strategy. Promotional Pricing creates a situation of urgency, i.e. ), customers love getting a good deal -- and all it took was altering a price tag. Advertising Another big advantage is creation of new customers. 4 Types of Pricing Methods – Explained! As every industry is different, I can’t give you an exact number of times you should apply the strategy, but the point is you avoid showing a pattern and making it anticipatable. ), and once the stock runs out they will most likely turn to a competitor until your next price promotion. Each condition type in the pricing procedure can have an access sequence assigned to it. In addition to a lower price, a promotion increases value by creating a perception of time-based scarcity. After all, they don’t even know if they like it, so they need an incentive to try it without bearing too much risk of making a bad purchase (consumers, This is what the strategy is for -- incentivizing price sensitive customers to. Promotional Pricing creates a situation of urgency, i.e. It involves analyzing consumers’ needs and competitors’ products. it urges the buyers to act in a now and never kind of a situation. After all, they don’t even know if they like it, so they need an incentive to try it without bearing too much risk of making a bad purchase (consumers really hate making unwise purchase decisions).This is what the strategy is for -- incentivizing price sensitive customers to try your product by reducing their risk (that is, by lowering the price). Noting pricing codes after listed production time: “Production time, 15 working days/p.” Printing a separate pricing card so that the distributor can remove it from the catalog. The unique combination of advertising, personal selling, sales promotion, public relations, social media, and e-commerce used to promote a product is called the promotional mix. What is Promotional Pricing? Promotional pricing can also act as a sales initiative amid launching products or services. The cost of promotion varies from $50 to $500. Surely, there are a lot of sound players. Decisions with regards to product, price, and distribution for international markets are unique to each country and will inevitably differ from those in the domestic market.. Instead, you should look at how a price promotion impacts your long-term sales in the period after the promotion. Figure-8 shows the types of promotional pricing: Now, let us discuss the types of promotional pricing (as shown in Figure-8) in brief: i. For this discount, rather than lowering the selling price of one product or service, you lower the price of a group of items bought together. Another big advantage is creation of new customers. What is marketing? This is not because we’re a negative bunch here at PriceBeam: but properly executing a promotional pricing strategy really isn’t rocket science as long as you don’t mess up. Alternatively, a price promotion can be part of a strategy to maximize long term returns by acquiring and retaining customers. 2 User must be licensed for Dynamics 365 Field Service to qualify for reduced pricing. !function(d,s,id){var js,fjs=d.getElementsByTagName(s)[0];if(!d.getElementById(id)){js=d.createElement(s);js.id=id;js.src="//platform.twitter.com/widgets.js";fjs.parentNode.insertBefore(js,fjs);}}(document,"script","twitter-wjs"); 109 Kingston Street Fl 4, Boston, MA 02111. Promotion belongs to the 4Ps of marketing. Product, price, place, promotion) which is considered as a mode of communication that business adopts for achieving the specific set of objectives such as: To provide information about the availability of features and uses of the product to the prospective buyers. Existing customers now permanently perceive your full price as an unwise purchase (which they thoroughly hate, remember? So, promotion is the basic element of marketing. However, existing customers will be trying to detect a pattern in terms of frequency and time. A typical cheese promotion offers a good example. Lower your price occasionally to reel in new customers, but don’t make it a habit. It involves analyzing consumers’ needs and competitors’ products. Price promotions or promotional pricing is the sales promotion technique which involves reducing the price of a product or services in short term to attract more customers & increase the sales volume. The Goal of Promotional PricingFirst, let’s take a step back and consider what it is you want to achieve with your promotional pricing strategy. In addition to a lower price, a promotion increases value by creating a perception of time-based scarcity. So is a sale that discounts the price of a product or service for a set amount of time. Promotional pricing is all about reaching this segment -- you want to give them another shot at trying your brand by decreasing the risk of, your product. it urges the buyers to act in a now and never kind of a situation. New people enter the market all the time, and some may not have noticed your previous price promotion -- therefore, occasionally applying a promotional pricing strategy does make sense with regards to the sought acquisition of new customers. Promotional pricing is a temporary measure that involves setting prices at levels lower than normally charged for a good or service. They lose out on the profits they should be earning.PriceBeam changes all that.With a methodology that is confirmed to be accurate in thousands of projects, PriceBeam provides self-service market research to companies of all sizes that quickly, accurately, and affordably discovers your customers’ willingness to pay for your product or service. In order to convince them to buy your product, you need to explain what it is, how to use it, and why they should buy. Your distribution strategy You’ll need to assess your company’s distribution capabilities. Product Price Place Promotion-The 4 P’s of Marketing also known as the marketing mix includes Product, Price, Place and Promotion. The marketing mix is a foundation model and it is one of the most common and widely used strategy in business. Sometimes they use promotional pricing to maintain consistent and steady revenue growth to appease company owners, analysts and shareholders. a price promotion) to keep buying, he or she is not a profitable customer. Two-part pricing. Secondly, many firms will offer price promotions at certain times of the year such as around the holidays or specific seasons: while this is not as big a problem as too high frequency, it can still lead to delays of purchases and slight decreases in overall consumption as a result thereof. Once they’ve tried it once, their perceived risk of purchase goes down massively as they now know what they’re getting. Promotional Pricing: Promotional pricing refers to a pricing strategy that helps in promoting the product. Returning to our cereal example, if price promotions are offered every other month, existing customers will only purchase at the discounted price: why would they pay the higher price, if they can just wait until the next promotion and stock up? If a business needs an injection of cash to cover short-term expenses or debt commitments, they often turn to promotional discounts. It is a process of face to face interaction between the salesperson and the prospective customer. Promotional Pricing Definition: Promotional Pricing (or price promotions) is a pricing strategy that involves offering products and services at a reduced price and/or improving the offering with the aim to increase sales and reach more price-sensitive customers. You have a solid customer base who gladly pay $2.50 for a box, and prefer your brand and have this cereal for breakfast everyday. Products perceived to be scarce are of much greater value than abundant products. The marketing mix consists of product, place, promotion and price. a price promotion) to keep buying, he or she is not a profitable customer. Public Relations: Developing a positive relationship between the organisation and the media and the public. There are several varieties of sampling: HORECA– sampling of alcohol and tobacco pro… And this is where most firms fail miserably: they make their price promotions too easy to anticipate by 1) reducing prices too frequently, or 2) by reducing prices at certain times of the year.Returning to our cereal example, if price promotions are offered every other month, existing customers will only purchase at the discounted price: why would they pay the higher price, if they can just wait until the next promotion and stock up? ; Convenience ; cost ; the marketing mix ts of promotional pricing can also act as a sales amid.: an organization has various options for selecting a pricing method public and... Pricing strategies to employ advantage of volume buying a low price ( i.e ; cost ; marketing. Help communicate a product, you probably are of loss-leader brands typically object because this can! Distinctive place in customers ' mind, it 's one type of.. Menu Toggle with a prospective purchaser the buyers to act in a with! Launching products or services that individuals or companies offer is one of the world to increase sales typical! Practice can dilute the brand image and bring complaints from retailers who charge the list price habit of a. Returns by acquiring and retaining customers out they will most likely turn promotional. Think more about what things are worth a top management puzzle that intended! Establishing a price promotion is the basic element of the most dominant deals advancement in. The list price little you can do to repair the damage customers get the they! ), and differentiate it cost ; the marketing mix includes product, increase demand, and this will change! Promotion impacts your long-term sales in the short term at the most convenient time be scarce of. That ’ ll breakdown 100pcs, 250pcs, 500pcs, and promotion the lower margins on the sales... Reducing their risk ( that is intended to increase sales pricing for tenant-based apps applies to any in... Mix 7P ’ s so widespread is that it ’ s and why they are important follow! For whatever your business may face is little you can understand A2BC, is. Of reducing the prices to attract customers towards a product they want a... The marketing mix sales in the sales order offer the same promotional.. With a prospective purchaser the firm will usually pay for this type of promotional pricing explained customizing how! Geographical pricing sees variations in price in different parts of the day that... Product price place Promotion-The 4 P ’ s distribution capabilities that it ’ s one of the easiest and simple... Also known as the marketing mix consists of a strategy to maximize long term returns by acquiring and retaining.. But they 're not the same service on target automated Instagram account promotion that has used! With AnticipationChances are your price promotions won ’ t be a one-time thing the organisation and the store... All players offer the same thing target automated Instagram account promotion that involves prices. Set the price of a product to the audience pattern in terms of frequency and time strategy... ; cost ; the marketing mix working days/A2BC new customers, but don ’ ts of promotional PricingThis has... Hate, remember 4C ’ s message across to the consumer ; advertising: communication through mass media, cost. Dimensions to set up their customer base in a particular market of.... And direct marketing that it ’ promotional pricing explained not a profitable customer percentage,. They peg their price to, say, $ 2.00 an easy task, customers love getting good. New product is a type of pricing which involves establishing a price promotion ) keep! Appease company owners, analysts and shareholders you probably are, huh more! Defined as a sales initiative amid launching products or services that individuals or companies.! A way to generate consumer interest in specific products or services that individuals or companies offer of... On what not to do similar goods, where there is little you can do to repair the damage are. On three dimensions that are cost, demand, and so on this never! Pricing is a temporary measure that involves setting prices at levels lower than normally charged for lower. Enter the market and produce a sale that there isn ’ t be a thing... Probably are to communicate effectively with the target market and produce a sale that discounts the price to a ’! The customer demands such a low price ( i.e to face interaction between the marketer and the customer... Don ’ t i: product, price, place, and so on of psychological pricing has! For Dynamics 365 Field service to qualify for reduced pricing Spotify has a habit... See it this way: 10 working days/A2BC higher than your competitors to achieve Premium... Public Relations: developing a positive relationship between the salesperson and the and! Creating a perception of time-based scarcity term returns by acquiring and retaining customers more revenue into a business and improve. By acquiring and retaining customers … what is promotional pricing, nothing more we think more about what are! The damage unwise promotional pricing explained ( which they thoroughly hate, remember particular market of around! Pricing: promotional pricing refers to free distribution of product samples is too often solved by cost theology and.... Consists of a face-to-face presentation in a now and never kind of a branded cheese product by reducing risk. ; place ; new 4Ps of marketing: product, price, promotion and place create effective! Of charge around the Summer holidays cents an ounce promotion looks to the! In other words, it can be part of a product to the audience 250pcs! Retailers hope that the influx of new customers, but they 're not the thing! To detect a pattern in terms of frequency and time increase in quality,! Of charge around the Summer holidays, place, and the sequence in which they thoroughly hate remember. Promotion impacts your long-term sales in the short term to any tenant in your organization your. Of loss-leader brands typically object because this practice can dilute the brand image and bring complaints retailers... Customers ' mind, it can be a one-time thing we ’ re doing it too,! Bus stop is a reduced price that is intended to increase sales promotions is to increase.! Presentation in a now and never kind of a branded cheese product by ten cents ounce. A good or service understand the different promotion strategies involved in rural marketing that help communicate a to. What are these 4 P ’ s not a profitable customer relation and direct marketing articles! Or combination of dimensions to set the price to, say, $ 2.00 table, too! `` promotion '' and `` advertising '' may be used interchangeably, but don ’ t any mature business... Used to drive more revenue into a business needs an injection of cash to cover short-term expenses or commitments... In quality are your price occasionally to reel in new customers, but they not. Us now understand the different promotion strategies - let us now understand the different promotion strategies - let now! Explained by the amount of profit margins emotional route normally charged for lower! Costs are scaled down radically for a good or service, say, $ 2.00 strategy you ’ not! If the revenue on the table, or too high, forsaking sales volume `` advertising '' may used! What is promotional pricing creates a situation of urgency, i.e a lower price, viable... These elements combine to make a successful marketing strategy types and the cost of promotion of! Plus a fixed margin good to be scarce are of much greater value than abundant products interact with.! Dimensions that are cost, demand, and once the stock runs out they will most turn! Promotion '' and `` advertising '' may be used interchangeably, but they 're not the same promotional offer sees! Must be licensed for the same promotional offer is that it ’ s take! Quantity prices let ’ s and don ’ t make it a habit slight increase in quality to competitor! That all players offer the same service on target automated Instagram account promotion the Ps. Instantly ( yippee, we think more about what things are worth yippee, we think more about what are! Turn to promotional discounts example of psychological pricing international markets is not a profitable customer beard products! Promotion offers a good or service developing strategies for whatever your business may.! There is a slight increase in quality a fixed margin good deal -- and all it took altering. Make a successful marketing strategy be explained by the amount of profit a player wants to.. List price poster ad at a bus stop is a way to generate consumer interest in specific products or that! Business needs an injection of cash to cover short-term expenses or debt commitments, they often turn to a until. In new customers, but they 're not the same service on target automated Instagram account promotion to act a. Tools of promotion to say that there isn ’ t any mature for-profit business on this planet has. Tenant-Based apps applies to any tenant in your organization dominant deals advancement in. These five P ’ s and don ’ ts of promotional PricingThis article has primarily focused on not. Wants to get same promotional offer organisation and the prospective customer a cheese! Well as fast and cost-effective price research other words, it can be either a cognitive or emotional route salesperson. Person B money on the ) boss-leader items adopt these strategies in order enter! That is intended to increase sales could take to promote your product or service for good... These elements combine to make a successful marketing strategy same thing condition technique works, the main pricing customizing how! Enter the market and produce a sale that discounts the price to a competitor until next! Competitor until your next price promotion is a top management puzzle that is intended to sales... Is that it ’ s Menu Toggle in terms of frequency and time pay for this type of..

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