Chapter 11 - Pricing Strategies

Question 1

Competitive pricing

Answer 1

Pricing strategies based on the prices charged by rivals

Question 2

Cost plus pricing

Answer 2

Adding a percentage (mark-up) to the costs of producing a product to get the price

Question 3

Mark up

Answer 3

The percentage added to unit cost that makes a profit for a business when setting a price

Question 4

Penetration pricing

Answer 4

Setting a low price when launching a new product in order to get established in the market

Question 5

Predatory or destroyer pricing

Answer 5

Setting a low price, forcing rivals out of business

Question 6

Pricing strategy

Answer 6

The pricing policies or methods used by a business when deciding what to charge for its products

Question 7

Product life cycle

Answer 7

Shows the different stages in the life of a product and the sales that can be expected at each stage

Question 8

Psychological pricing

Answer 8

Setting the price slightly below a round figure

Question 9

Skimming or creaming

Answer 9

Setting a high price initially and lowering it later

Question 10

Unit costs

Answer 10

The same as average cost (total cost divided by output)