1.3.3 Pricing strategies

Question 1

define pricing

Answer 1

the strategy a business uses to determine prices of its products

Question 2

define strategy

Answer 2

medium to long term plan of the business and the pricing needed to fit business objectives

Question 3

depends on

Answer 3

• product/service
• competition in the market
• aims and objectives of the business

Question 4

helps with

Answer 4

• achieving business objectives
• market positioning
• cost recovery
• competitive advantage

Question 5

define price skimming

Answer 5

set high to start creating high profits and used to pay back costs and then lowered

Question 6

define cost plus pricing

Answer 6

seeks to set a price for a product which covers the costs and provides good profit margin for the business

Question 7

issue with price skimming

Answer 7

as competitors enter market price is reduced

Question 8

cons of price skimming

Answer 8

customers may wait for price to drop

Question 9

define competitive pricing

Answer 9

products priced in line with competition

Question 10

define penetration pricing

Answer 10

setting prices low to encourage sales and to persuade customers to try the product, repeating purchases as they like it later rising prices

Question 11

predatory pricing

Answer 11

aggressive price cutting used to deter competitors out the market

Question 12

define psychological pricing

Answer 12

set to appear lower to the consumer

Question 13

pro psychological pricing

Answer 13

appropriate for businesses with high priced goods

Question 14

con psychological pricing

Answer 14

other companies could have it at lower prices

Question 15

factors determining pricing strategy

Answer 15

PeD
level of competitors
strength of brand
stage in product life cycle
costs and needs to make a profit