Edexcel Business Topic 2.2.2! Flashcards

Page 6

1
Q

2 Types of pricing strategy

A
  1. High Volume Pricing Strategy
  2. High Margin Pricing Strategy
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2
Q

What is High Volume Pricing Strategy

A

Producing a lot of product at low cost

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3
Q

Why is High Volume Pricing Strategy possible for businesses

  • Think about why you can mass-produce at low cost
A

ECONOMIES OF SCALE

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4
Q

What is Economies of Scale

A

Average cost of production falls as business increase the amount of products.

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5
Q

What types of product are best at High Volume Pricing Strategy

Give 2

A
  1. Simple Product
  2. Standarlized product
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6
Q

List 1

Benefits of High Volume Pricing Strategy

A

Allow businesses to reduce promotion cost!

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7
Q

What is High Margin Pricing Strategy

A

Selling in LOW quantities but charging PREMIUM PRICE for it

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8
Q

Why can’t u sell in high quantities for High margin pricing strategy?

A

Reduce customer’s impression that the product/s is exclusive

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9
Q

2 Main influences on Pricing Strategies

A
  1. Competition
  2. Product Life Cycle
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10
Q

How can COMPETITION influences on pricing strategies

A

When HIGH COMPETITION, business might need to REDUCE the price

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11
Q

4 stages of Product Life Cycle

A
  1. Introduction
  2. Growth
  3. Maturity
  4. Decline

IGMD

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12
Q

What pricing strategies is common at stage 1: Introduction!

Product Life Cycle

Dun have to be high margin/high volume!

A

At introduction, LOW prices to attract buyers

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13
Q

What pricing strategies is common at stage 2: Growth!

Product Life Cycle

Dun have to be high margin/high volume

A

Price increases to true value!

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14
Q

What pricing strategies is common at stage 3: Maturity!

Product Life Cycle

Dun have to be high margin/high volume!

A

HIGH prices will be set

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15
Q

What pricing strategies is common at stage 4: Decline!

Product Life Cycle

Dun have to be high margin/high volume

A

Extension Strategies!

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16
Q

List me one type of Extension Strategies

A

Reduce prices!

17
Q

2 Types of Market Segment

A
  1. Mass Market Product
  2. Niche Market Product
18
Q

What is Mass Market Product

A

Large Market with many customers who have similar needs!

19
Q

high or low competiton at mass market product

A

HIGH

20
Q

Low or High prices set at mass market product

A

LOW!

21
Q

Niche Market Product

A

Aimed at customers with SPECIFIC needs/interest

22
Q

High/Low prices on niche market product

A

HIGH