Marketing - Price

Question 1

Factors affecting pricing strategy

Answer 1

• target market, appeal to specific segment
• demand for product, high demand = higher price
• objectives, sales or profit
• cost of materials

Question 2

Pricing strategies - cost plus - advantages and disadvantages

Answer 2

+ ensures costs covered and profit made
+ small time investment
- doesn’t cover indirect costs

Question 3

Pricing strategies - skimming - advantages and disadvantages

Answer 3

+ lack of competition allows higher prices
+ ‘hype’ allows higher prices
- high initial prices put off customers

Question 4

Pricing strategies - loss leaders - advantages and disadvantages

Answer 4

+ creates greater footfall into business
+ customers often buy regularly priced products
- risk that customers will only buy loss leader

Question 5

Pricing strategies - destroyer - advantages and disadvantages

Answer 5

+ increases market share

• only possible for larger companies who can afford loss
• illegal, cma anti-competition regulations