1.3.3 pricing strategies Flashcards
price
the money charged for a product/service
stages of price setting
- develop price objective
- assess target market ability to purchase
- determine product demand
- analyse demand cost + profit relationship
- evaluate competitor prices
- select pricing strategy
- decide price
pricing method
used to calculate the actual price
pricing tactics
adopted in short run to suit particular situation
price leader
price changes are followed by rivals (eg Tesco’s)
pricing strategies
adopted over medium/long term to achieve marketing objectives
price takers
have not option but to change ruling market price (iceland/coop/budgens)
price makers
able to fix their own price (apple)
price followers
follow the price chnaging lead of market leader (lidl, asda)
different types of pricing to reflect social change (5)
- subscription pricing
- dynamic pricing
- price comparison sites
- online sales
- auction sites
subscription pricing
- user pays a monthy amount for the service
- customers pay a higher price for an ad free service
- eg netflix, spotify etc
dynamic pricing
- relying on chnages in the demand + supply of product
- tracking number of clicks a product has
- use price to attract customers
- eg amazon, premier inn
price comparison sites
- give lots of info in variety of formats - may be difficult to compare
- eg confused.com, gocompare
online sales
- black friday
- attract more customers
- get rid of stock
auction sites
- sellers advertise a product on the site for a minimum price + invite bids from potential buyers
- have timelines on them, closer to the bid the price will rise
- eg ebay, gumtree
name the pricing strategies
- cost plus pricing
- price skimming
- penetration pricing
- predatory pricing
- competitive pricing
- price wars
- psychological pricing
- loss leader
- dynamic pricing
cost plus pricing
cost, add value to determine the price
price skimming
an increase in price is initially set to max profits
penetration pricing
selling the product at a price which undercuts competitor price
predatory pricing
selling the product at a price where it incurs a loss
competitive pricing
where rivals sell a product for a similar price
psychological pricing
changing a price that ends in 99p
price wars
2 or more firms take turns to lower the price of their product
loss leader
product sold at a loss making price to encourage customers to buy that product + more
