Marketing Flashcards
How do you Calculate Price Elasticity Of Demand?
Percentage change in demand/percentage change in price
How do you Calculate Income Elasticity Of Demand?
Percentage change in demand/percentage change in income
How do you calculate Cross Elasticity Of Demand?
Percentage change in demand for A/percentage change in price for B
Define Skimming Price.
Where the business sets a high price for its goods or services in an attempt to gain profits quickly.
Why would you use Price Skimming?
- products that have a short life cycle
Define Penetration Pricing.
Business sets a low price it initially, hoping to attract consumers, later increasing the price dependant on the demand for the product.
Define Prestige Pricing.
A high price is set to attempt to create an image and indicate a high level of quality.
Why is Penetration Pricing used?
To help a new product establish itself in the market and subsequently gain a share of the market.
Define Psychological Pricing.
Involves setting a price that sounds less than it really is, e.g. 99pence.
Define Loss Leaders.
This involves pricing some products lower than other outlets to attract the customer into the shop, hopefully resulting in purchases of other products that will cover the loss in sales of the cheaper products.
