19.4 Price is a key part of the marketing mix

Question 1

Mark-up pricing

Answer 1

Adding a fixed mark-up for profit to the unit cost of buying in a product.

Question 2

Cost-plus pricing

Answer 2

Setting a price by calculating a total unit cost for the product and then adding a fixed profit markup.

Question 3

Contribution-cost pricing

Answer 3

Setting prices based on the variable cost of making a product, in order to make a contribution to fixed costs and profit.

Question 4

Competitive pricing

Answer 4

Making pricing decisions based on the price set by competitors.

Question 5

Price discrimination

Answer 5

Charging different groups of consumers different prices for the same good or service.

Question 6

Dynamic pricing

Answer 6

Offering products at a price that changes according to the level of demand and the customer’s ability to pay.

Question 7

Penetration pricing

Answer 7

Setting a relatively low price to achieve high volumes of sale.

Question 8

Market skimming

Answer 8

Setting a high price for a new product when a firm has a unique or highly differentiated product with low price elasticity of demand.

Question 9

Psychological pricing

Answer 9

Setting a price at a level that matches consumers’ views about a product’s perceived value.