1.3.3 pricing strategies

Question 1

size pricing strategies

Answer 1

cost-plus
competitive
skimming
penetration
predatory
psychological

Question 2

cost-plus pricing

Answer 2

cost to produce the products are worked out then money is added on top

Question 3

two ways of cost-plus pricing

Answer 3

add a profit margin in £
add a % mark up on top of the cost of making the product

Question 4

competitive pricing

Answer 4

products are priced in line with competitors

Question 5

skimming pricing

Answer 5

product is priced high to begin with as it has a desirability factor

Question 6

penetration pricing

Answer 6

setting prices really low on a new product to encourage sales and to persuade customers to try the product.
when they like the product the price is raised

Question 7

predatory pricing

Answer 7

businesses may hold off a new entrant by lowering their prices so competitor cant make any profit

Question 8

psychological pricing

Answer 8

pricing a product at £1.99 instead of £2.00 to make it appear cheaper

Question 9

factors influencing pricing strategies

Answer 9

number of usps / amount of differentiation.
price elasticity of demand.
level of competition in the business environment.
strength of brand.
stage in product life cycle.