Chapter 13 Flashcards
Cost-plus pricing
Unit cost of the product plus a profit mark-up.
Competitive pricing
The price is the same as or just below the price of competitors’ products to try to
capture more of the market.
Psychological pricing
The price is set to match the consumers’ expectations and perceptions of the product
Price skimming
The price is set high for a new product on the market.
Penetration pricing
The price is set lower than competitors’ prices to enter a new market and gain market share.
Promotional pricing
The price is set at a low level for a short time period.
Price elasticity
A measure of the responsiveness of demand following a price change
Price elastic demand
Demand changes by a greater proportion than price change
Price inelastic demand
Demand changes by a smaller proportion than price change.
