2.2 Flashcards
what is elasticity
the measure of the responsiveness of demand to a change in a relevant variable
what is price ELASTIC demand
change in price will lead to more than proportional change in demand
What is price INELASTIC demand
change in price will lead to a less than proportional change in demand
what are 3 things that influence PED
substitute goods
time
definition of the market
what is a niche market
a smaller segment of the market where specific consumers are looking for specific needs
what is a mass market
a large market segment where goods are produced in large quantities for a wide range of consumers.
what pricing strategies do firms use
cost-plus
price penetration
price skimming
predatory pricing
competitive pricing
what are the 4 p’s in the marketing mix
product
price
place
promotion
what is cost-plus pricing
a percentage markup is added to the cost of producing a product or service to calculate a selling price
what is price skimming
setting an high initial price to recoup cost the lowering the price used on early adopters
what are early adopters
people who buy the latest tech as soon as it is readily available and will pay any price set
what is price pentration
initial low price then increasing it to gain market share
what is predatory pricing
prices are set ridiculously low to force competition out of the market
what is a problem with predatory pricing
it can be illegal if the pries are raised after gaining market share
what is psychological pricing tactic
prices are set at £5.99 rather than £6 to make the products seem cheaper
what are price leaders
firms that dominate market set a price which firms then follow.
what are price takers
firms which follow market prices set by price leaders
what are the factors which influence choice of strategy
strength of brand
stage in product life cycle
pEd of product
cost to make profit
number of USP
level of competition
what is non price competition
when a firm distinguishes product from competitors in terms of - branding, quality, promotion and customer service
why would a firm differentaite their products
Grants them a competitive advantage and should shift demand curve to the right as product is deemed as more attractive
