1.3.3 Flashcards
What are the 7 pricing strategies?
Penetration
Loss leader
Price skimming
Competitive pricing
Predatory
Discrimination
Psychological pricing
What is price penetration?
launch product at very low price and gradually increasing price throughout its lifecycle.
Why use price penetration?
To gain market share in a competitive market.
In order to gain loyal customer base.
Why would we use price skimming?
When there is a high demand for the prodcut.
What is price skimming?
Launching the product with very high price and gradually decreasing.
What is competitive pricing?
Launching product based on competitors pricing
What is price taker for competitive pricing?
Following the prices of competitors.
What is a price maker?
Deciding what prices they should be set at.
What is predatory Pricing?
Launch products at an extremely low price.
Why would you use predatory pricing?
To kick rivals out of the market.
What is one drawback of predatory pricing?
It could lead to price wars
Damaging profit margins.
What is one benefit of predatory pricing?
Forces small firms to stay away.
What is loss leader pricing method?
When you have a large product portfolio and you sell a complement good for a loss in order to boost sales for more profitable products.
Benefit of using loss leader?
Attract new customers
What is physological pricing?
Setting the price so it looks more appealing to customers.
2 advantages of psychological pricing?
Makes customers have the idea they saved money
Can be used with different pricing strategies
What are 6 factors to consider when choosing pricing strategies?
Number of USP
PED
Level of competition
Strength of brand
Stage in life cycle
Costs need to make profits.
To remain competitive business have to what?
Continuously change price.
