Key terms(1.3.3)

Question 1

Competitive pricing definition

Answer 1

when a business sets a price similar to competitors selling/rival products

Question 2

Cost plus pricing definition

Answer 2

a cost based method for setting the price of goods and services and is calculated by adding a mark up percentage to the cost of a product

Question 3

Penetration pricing definition

Answer 3

setting a low price initially and accepting limited short term profits/losses in order to build market share before switching to a more profitable and higher price

Question 4

Predatory pricing definition

Answer 4

setting a low price forcing rivals out of the market (illegal in the UK but difficult to prove)

Question 5

Price comparison websites definition

Answer 5

a website that compares the price of a particular product or service in different stores of different businesses

Question 6

Price skimming definition

Answer 6

setting a high price at the launch of a product to gain the money back form R&D and to take advantage of those wanting to be the first people to purchase

Question 7

Pricing strategy definition

Answer 7

method used by a business when deciding the price at what a product is sold for

Question 8

Psychological pricing definition

Answer 8

tactics that are designed to appeal to a customers emotional response to prices