chapter 7 - competing on price

Question 1

9 factors affecting price of a product

Answer 1

1. complimentary goods
2. supply
3. added value
4. competition
5. substitute goods
6. branding
7. technology
8. demand
9. cost of products

Question 2

Mark up ( cost + price )

Answer 2

costs of the product + a % profit price
INELASTIC STRATEGY

Question 3

premium pricing

Answer 3

high price achieved through added value / branding giving high profits but at the sacrifice of market share
INELASTIC STRATEGY

Question 4

skimming

Answer 4

high price, giving high profits but at the sacrifice of initial market share. As competition increases prices will fall. ELASTIC STRATEGY

Question 5

early adopters

Answer 5

consumers who take risks to acquire new products and services

Question 6

penetrative pricing

Answer 6

low price, low profits but allows for high market share growth. - low price in short run then price increases
ELASTIC STRATEGY

Question 7

predatory pricing

Answer 7

low price, below competition to eliminate competition. This is sometimes used by dominate firms and if proved is illegal.
ELASTIC STRATEGY

Question 8

psychological pricing

Answer 8

breaking price down from whole o round numbers. 9.99 rather than 10
ELASTIC STRATEGY

Question 9

market based pricing

Answer 9

price is based on competition or just below - firms will try not to compete on price if this is the case. ELASTIC STRATEGY

Question 10

price discrimination

Answer 10

different prices charged to different consumers based upon: age, gender, location, time of day, pre payment discount

Question 11

dynamic or surge pricing

Answer 11

dynamic pricing method where prices are temporarily increased as a reaction to increased demand and mostly limited supply