1.3.3. Pricing Stratgies Flashcards
1
Q
Price Penetration
( new product)
A
When you set a low price to gain market share
2
Q
Price Skimming
( new product)
A
When you set a high price and lower it over time
3
Q
Cost- plus pricing
( existing products)
A
Setting a price by adding a mark up %to the cost of making the product
E.g. 35p + 100% = 70p
+ covers cost of production
- could be priced too high
- doesn’t guarantee a net profit
4
Q
Predatory pricing
A
Selling at a deliberate low price to drive out competition
+ drives out competition
+ more market share
- illegal so could get fined/penalties
5
Q
Competitive pricing
A
Undercutting competitor prices
+ take market share from rivals
- will reduce profit margins per unit
6
Q
Psychological pricing
A
Ending with .99
+ makes customer feel like its less $
- wont work on everyone
7
Q
Loss Leader
A
Price us set below cost price as a way of attracting customers
8
Q
Influence on pricing strategy
A
- costs
- USP that makes the good inelastic?
- No. of competitors
- target market
- stage in the product life cycle
- brand image Loyalty customers
