1.3.2 Promotion + 1.3.3 Pricing Stratagies

Question 1

What is the definition of promotion

Answer 1

The attempt to draw attention to a product or a business in order to gain new customers or retain existing

Question 2

What are the objectives of promotion

Answer 2

1.To obtain and retain customers
2.To inform consumers about a new product
3. Reach a widely dispersed target audience (TV)
4. Remind customers about the product
5. Show that a product is better than its competitors
6. Develop or improve the image of a firm

Question 3

What is above the line promotion

Answer 3

Advertising through the media such as radio or newspapers

Question 4

What are the 2 basic functions of advertising

Answer 4

To be informative and persuasive

Question 5

What are some mediums of advertising

Answer 5

Television
Newspapers
Cinemas
Radio
Internet

Question 6

What is below the line promotion

Answer 6

Promoting through any method that does not involve advertising

Question 7

What are the forms of below the line promotion

Answer 7

Sales promotion
Public relations
Direct mailing
Merchandising and packaging

Question 8

What are the factors effecting choice of promotion

Answer 8

Cost
Marketing budget
Target audience
Advertising of competitors
The law

Question 9

What is pricing strategy

Answer 9

A pricing approach used in order to achieve marketing objectives

Question 10

What is pricing tactic

Answer 10

A pricing approach used to achieve specific short term objectives

Question 11

What is price skimming

Answer 11

Charging a high price for a product while it is new to the market

Question 12

What is penetration pricing

Answer 12

Charging a low price in order to break into the market, attracting customers and therefore achieving market share

Question 13

What is cost-plus pricing

Answer 13

Occurs when the firm calculates the cost of making the good and then adds on a mark-up for profit

Question 14

What is the formula for cost plus pricing

Answer 14

Cost of production per unit + % mark-up

Question 15

What is competitive pricing

Answer 15

A strategy whereby firms follow the price set by the market leaders or by the other firms in a highly competitive market

Question 16

What is predatory pricing

Answer 16

Occurs when a firm sets its prices lower than those of its competitors, often below average cost, in the hope that one or more firms will be driven out of the market because it cannot follow suit

Question 17

What is psyhcological pricing

Answer 17

Setting the price at a level that appears to be lower to the customer (5 or 9)

Question 18

How does the costs of production determine the most appropriate pricing strategy

Answer 18

Firms must make a profit to survive in the long term
Cost plus pricing is often used

Question 19

What does the size of the profit mark-up depend on

Answer 19

The level of competition
The price customers are prepared to pay
The firms objectives

Question 20

How does the PED determine the most appropriate pricing strategy

Answer 20

If the product has price inelastic demand then the firm can raise its price and then total revenue will also increase e.g. toothpaste
Price elastic products will benefit from price cuts

Question 21

How does differentiation and USP determine the most appropriate pricing strategy

Answer 21

A USP means that a firm can charge a higher price

Question 22

How does the level of competition determine the most appropriate pricing strategy

Answer 22

Highly competitive markets are likely to see competitive pricing

Question 23

How does the strength of the brand determine the most appropriate pricing strategy

Answer 23

Strong brands can charge a higher price than weak ones
Promotional techniques are used to strengthen the brand

Question 24

How does the stage in the product life cycle determine the most appropriate pricing strategy

Answer 24

Firms may adjust the price of a product as it goes through its life
Young products may use penetration pricing to enter a market
A product with growing sales may now be able to increase its price

Question 25

What is dynamic pricing

Answer 25

Prices are flexible and depend upon time of day and week

Question 26

What are auction sites

Answer 26

Retailers get the highest price possible but it does cost them a usage fee

Question 27

What is personalised pricing

Answer 27

Pricing is based upon your online shopper profile and history

Question 28

What is subscription pricing

Answer 28

Paying a monthly fee to access a specific product range is more common online