marketing- price Flashcards
what are product orientated strategies
where pricing strategies of a product are based on what customers want to pay/ willing to pay/ accept
what are cost based/ product oreintated strategies
pricing strategies are based on how much it costs to produce the product not based on what the customer wants
what does the type of strategy used depend on
- type of product
-product range
- eco circumstaces
-financial strength
- brand image
- market type
- competition
what Is market skimming
where the produc is launched into the market at a high price and is eventually lowered. - trying to max profits for each item sold for a limited period while oriductremains unique
customers are willing to pay this price- early adopters
this often occurs when product has a technological advancement or because there is a strog=ng brand image/ reputation customers are willing to pay the price as they want to be the first to access the product.
the price is then decreased as new products are released e.g. iPhones
what is market penetration
when the price of a product is bought into the market at a low price so that customers buy the product, potentially at a loss, but gradually increase price and customers with brand loyalty will carry on buying product although risk that consumers won’t buy as they issue its low quality due to low price.
customers also may be encouraged to buy in bulk
what is going rate pricing
normally used in highly compeitive markets by small businesses where they have no other choice but to accept going rate price in order to survive
what is pcsyc pricing
where customers believe they are getting a good deal/ value , price consumers expect to pay
for example a business that has an established brand for quality/ style , customers are willing to pay a high price even if its no better quality than a high street shop as they perceive it as good and are willing to pay a higher price for it
-also using pricing that’s just below next rounded figure e.g. £19.99 in hopes customers believe they are getting good value as it seems cheaper
what is loss leader pricing
by making a loss on one product to attract customers to buy from business in hopes to make a profit on other products to make uo for loss- brand loyalty and repeat purchases- often used by supermarkets
what is destroyer pricing
- illegal , where business charges such a low price to knock competitors out of market
what is cost plus pricing
where a percentage of the price is for profits and the remaining is the cost of the product, although hard to calculate the cost for each invdividual unit,
although cost passed directly onto consumer and every unit sold is at a profit
but no allowance for currency changes
what us full cost pricing
same as cost plus but also adding an extra cost for other costs such as overheads- marketing and administration
- complex calauctae overheads per unit
what is contribution pricing
includes a contribution for variable costs and contribution towards overheads and profits
allows for flexibility as diff pcontribution for diff products
allowing discrimination pricing Strats for diff consumers
criticisms of cost based pricing
- hard to calculate and time consuming
- not in line with what consumers want therefore more risky as pays no attention to competitors and market trends- too rigid when demand changes
- prices too high business and sales will suffer
