Marketing - Price Flashcards
Price depends on:
See sheet
Price
The actual amount paid for the product/service by the customer to the seller
Pricing strategies
Penetration, destroyer, promotional, premium, loss leaders, competitive, price discrimination, market skimming
Penetration pricing
When entering an existing market with similar products. Initial lower price until popular then raised in line with competitors
Destroyer pricing
To eliminate competition. Prices are lowered to force competitors down. Weaker competition will be unable to survive. Price then increased. E.g. Stagecoach
Promotional pricing
Prices reduced for a short period of time. Reduces stock levels quickly, injects new life into product. E.g. sales, buy 1 get 1 free
Premium pricing
High prices set for product and maintained to create and exclusive image for product e.g. Ferrari, Gucci, Timberland
Loss leaders
Advertise a limited range of products at low, unprofitable prices in order to entice customers to store. Profits are made from other purchases at same time
Competitive pricing
Firms in the same market charge similar prices to avoid a price war. Use advertising, promotions, packaging etc instead E.g. Petrol
Price discrimination
Companies charge different prices for same products depending on time of day, year or amount of usage e.g. BT phone calls at different times of day/holiday prices throughout year
Market skimming
When a company launches a new product at a high price to make a large initial profit. As competition increases, price will gradually fall
Channels of distribution
Manufacturer-Customer
Manufacturer-Retailer-Customer
Manufacturer-Wholesaler-Retailer-Customer
The Channel of Distribution depends on a variety of factors including:
See sheet
