marketing - marketing mix (four p's) Flashcards
What is the marketing mix?
The effective combination of the four key elements of marketing (the 4 Ps).
What are the 4 elements of he marketing mix?
Product, price, promotion and place.
What is price?
How much the business will charge for the good being sold or service provided.
Name the 5 different pricing methods.
- Price skimming
- Price penetration
- Competitive pricing
- Loss leader
- Cost-plus pricing
What is price skimming?
Charging a high price at the launch of a product and lowering it once the product is established.
What type of firms usually use price skimming?
Established firms with loyal customers.
Give an advantage of price skimming.
- Increases revenue
* Helps cover research & development costs
Give a disadvantage of price skimming.
- May not be competitive
* Can be seen as exploiting customers who but first
What is price penetration?
Charging a low price when a product is new to the market and later raising prices.
Give an advantage of price penetration.
- Increases market share
* Lots of customers as it’s seen as value for money
Give a disadvantage of price penetration.
- Customers may stop buying and go to competitors and stop buying once prices are raised
- Makes little profit at first
What is competitive pricing?
Charging a similar price to other businesses in the market.
When would a business use competitive pricing?
When there is lots of choice but not much product differentiation in the market.
Give an advantage of competitive pricing.
• Keeps business competitive
Give a disadvantage of competitive pricing.
- May make very little profit
- Have to find ways other than price to attract customers
- May lead to price wars if one business lowers their price
