Marketing mix:Price 3.3.2

Question 1

What is cost plus pricing and what are the advantages and disadvantages

Answer 1

Cost of producing product + Profit

The method is easy

Lose sales if the selling price is a lot higher than your competitor’s price

Question 2

What is penetration pricing and what are the advantages and disadvantages

Answer 2

Low price for a new product in order to attract customers

Useful when launching a product into a new market

Customers will expect low prices so when you increase price customers may not want to buy from you again

Question 3

What is price skimming and what are the advantages and disadvantages

Answer 3

When a high price is set for a new product on the market

Can make people think product is good quality because it’s expensive

Consumers may not buy the product because they think its overpriced

Question 4

What is promotional pricing and what are the advantages and disadvantages

Answer 4

When a product sold at a low price for a short period of time

Useful to get rid of stock that doesn’t get sold

Low sales revenue as prices are low