3 - Pricing Decisions

Question 1

What Are The Different Pricing Decisions?
(2 Points)

Answer 1

~ Price penetration.

~ Price skimming.

Question 2

What Is Price Penetration?
(2 Points)

Answer 2

~ Low initial price, to attract customers and gain market share.

~ Then gradually increase the price overtime.

Question 3

What Are The Limitations Of Price Penetration?
(2 Points)

Answer 3

~ Low prices = low profit margins.

~ Retaliation from rivals.

Question 4

What Is Price Skimming?
(2 Points)

Answer 4

~ High initial price, usually for new innovative products.

~ Then gradually decrease the price overtime.

Question 5

What Are The Limitations Of Price Skimming?
(2 Points)

Answer 5

~ Retaliation from rivals.

~ Risk of customers becoming frustrated, that they have paid a higher price for the product.

Question 6

What Are Other Pricing Strategies?
(6 Points)

Answer 6

~ Predatory pricing.

~ Competitive pricing.

~ Physiological pricing.

~ Loss leader pricing, below cost price.

~ Price discrimination.

~ Dynamic pricing.