Marketing Mix

Question 1

What is price?

Answer 1

the money charged for the product/service

Question 2

Stages of price setting

Answer 2

• Develop pricing objectives
• Assess of target markets ability to purchase
• Determine demand for product
• Evaluate competitors prices
• Select pricing strategy and tactics
  -Decide on price

Question 3

Financial objectives that will influence marketing

Answer 3

• Maximise profit
• Achieve a target level of profits
• Achieve a target rate of return
• Maximise sales revenue
• Improve cash flow

Question 4

Marketing objectives that will influence pricing

Answer 4

• Maintain/improve market share
• Beat/prevent competition
• Increase sales
• Build a brand

Question 5

Pricing methods

Answer 5

The method used to calculate the actual price set

Question 6

Pricing strategies

Answer 6

Adopted over the medium to long term to achieve marketing objectives . Have a significant impact on marketing strategy

Question 7

Pricing tactics

Answer 7

Adopted in the short run to suit particular situations
Limited impact beyond the product itself

Question 8

Price takers

Answer 8

Have no option but to change the ruling market price

Question 9

Price makers

Answer 9

Able to fix their own price

Question 10

Price leaders

Answer 10

Market leaders whose price changes are followed by rivals

Question 11

Price followers

Answer 11

Follow the price-changing lead of the market leader

Question 12

Things business need to consider before setting the price

Answer 12

• Competitors products and prices
• Costs of production, promotion, etc
• Market conditions, for example, demand levels, accepted prices, market share, etc
• The state of the economy and its impact on consumers’ disposable income

Question 13

Factors impacting on price charged

Answer 13

• The bargaining power of customers in the target market - Do they sell to consumers or businesses?
• Location of the business
• Brand image, reputation and customer loyalty
• Product quality and packaging
• Price elasticity of demand - Is the product elastic or inelastic?

Question 14

Penetration pricing

Answer 14

a strategy used by businesses to attract customers to a new product or service by offering a lower price initially

Question 15

Price Skimming

Answer 15

Setting the new products price as high and lowering them as competitors enter the market.

Question 16

Early adopters

Answer 16

individuals that use new products before the majority of people. They are risk-takers and trendsetters and have a strong influence on the success or failure of a new product. It is for this reason many businesses seek to gain the approval of early adopters.

Question 16

Price leadership

Answer 16

a leading firm in a given industry is able to exert enough influence in the sector that it can effectively determine the price of goods or services for the entire market

Question 17

Price taking

Answer 17

an individual or company that must accept prevailing prices in a market, lacking the market share to influence market price on its own

Question 18

Predator

Answer 18

the illegal business practice of setting prices for a product unrealistically low in order to eliminate the competition.

Question 19

Premium pricing

Answer 19

the practice of keeping the price of one of the products or service artificially high in order to encourage favorable perceptions among buyers, based solely on the price.

Question 20

Seasonal pricing

Answer 20

• a revenue strategy that hotels use to set different room rates during particular periods of time throughout the year

Question 21

Loss leaders

Answer 21

prices a product lower than its production cost in order to attract customers or sell other, more expensive products.

Question 22

Psychological pricing

Answer 22

a way businesses set prices to influence how customers perceive the value of a product or service

Question 23

Price discrimination

Answer 23

a selling strategy that charges customers different prices for the same product or service based on what the seller thinks they can get the customer to agree to.

Question 24

Cost-plus pricing

Answer 24

by which the selling price of a product is determined by adding a specific fixed percentage

Question 25

Mark up

Answer 25

Markup (or price spread) is the difference between the selling price of a good or service and its cost. It is often expressed as a percentage over the cost.

Question 26

Discrimintation pricing

Answer 26

charging different target segments different prices for the same product (eg. cinema kids cost less than adults)

Question 27

Dynamic pricing

Answer 27

Price changes that help achieve marketing objectives and increase capacity (eg. Planes cost more the closer you get to departure)