5.5 (2) - products and pricing

Question 1

Price skimming

Answer 1

Setting a high price for a product when it first enters the market

Question 2

Penetration pricing

Answer 2

Launching a new product at a low price to achieve fast sales

Question 3

Competitive pricing

Answer 3

Matching the prices that competitors charge

Question 4

Loss leader

Answer 4

A product sold at a loss in the hope that the customer will buy other items from the business where they make a profit

Question 5

Cost plus pricing

Answer 5

Where products are priced by covering the cost of it to the retailer and adding a percentage on top

Question 6

what happens if you increase price?

Answer 6

normally leads to a fall in the quantity demanded

Question 7

fall in sales will vary depending on what factors? -3

Answer 7

-if the product has a strong or weak brand image
-the product has a unique selling point
-the size of the price increase.

Question 8

why do people use price skimming?

Answer 8

helps the business make money to recoup development costs

Question 9

why do people use penetration pricing?

Answer 9

reduces unit costs through bulk purchasing

Question 10

why do people use competitive pricing?

Answer 10

only a few large businesses and customers can compare prices easily, being influenced by price.

Question 11

why do people use loss leader?

Answer 11

tempt people and hope that other products are purchased which gain the business a profit overall.

Question 12

why do people use cost plus pricing?

Answer 12

simple to apply but does not take into account what the customer is willing to pay or competitor prices.

Question 13

factors influencing price -5

Answer 13

-Costs need to be covered
-Demand — how much customers are willing to pay
-nature of the market — competitors
-Position in the product life cycle
-balanced with other elements of marketing mix