12. Pricing strategies Flashcards
1
Q
Pricing strategies:
A
- Cost plus pricing
- Price skimming
- Penetration pricing
- Predatory pricing
- Competitive pricing
- Psychological pricing
2
Q
Cost plus pricing
A
Price =Unit cost + (Mark-Up x Unit cost)
3
Q
Price skimming
A
- Some businesses may launch a product into a market charging a high price for a limited time period.
- The aim of this strategy is to generate high levels of revenue with a new product before competitors arrive, and exploit the popularity of a new product while it is unique
4
Q
Penetration pricing
A
- Sometimes business will introduce a new product and charge a low price for a limited period.
- The aim of this strategy is to develop a secure initial position in the market from which further progress can be made.
5
Q
Competitive pricing
A
pricing strategies based on the prices charged by rivals
6
Q
Psycological pricing
A
Setting the price slightly below a round figure
7
Q
Factors that determine the most appropriate pricing strategy for a particular situation
A
- Differentiation and USP
- Price elasticity of demand
- Amount of competition
- Strength of the brand
- Stage in the product life cycle
- Costs and the need to make a profit
8
Q
Changes in pricing to reflect social trends
A
- Online sales
- Dynamic pricing
- Auction sites
- Personalised pricing
- Subscription pricing
- Price comparison sites
9
Q
mark-up
A
the percentage added to unit cost that makes a profit for a business when setting the price
10
Q
predatory or destroyer pricing
A
setting a low price forcing rivals out of the business
11
Q
Pricing strategy
A
The pricing policies or methods used by a business when deciding what to charge for its products
12
Q
Unit costs
A
The same as average cost (total cost divided by output)
13
Q
A
