Price Flashcards
1
Q
What are the six factors that affect the price
A
- Production costs
- demand
- amount of competition
- Business objectives
- position in the product life-cycle
- The rest of the marketing mix
2
Q
How does the businesses aims and objectives influence its prices
A
- If a business is aiming to increase its market share and might put its prices lower than its competitors to increase sales
3
Q
How does cost of production affect the price of the product
A
- The pricing is going to be higher than the average unit cost to make a profit
- If business doesn’t have control over all it costs for example from materials of these go up a business may have to increase its prices
4
Q
How does where a product is and its life-cycle affect its price
A
- If a product is in the introduction and growth phases of them may charge a very low of very high price to encourage people to buy it
- If a product is in its maturity phase if it may need to bring its prices in line with competitors prices
- If a product is on the decline stage of a main need to reduce the price in order to increase demand for the product again
5
Q
How does the mind affect how product is priced
A
- If there is a high demand and a product of them may increase the price of a product however if the prices are too high the demand of a product will fall and less people be willing to buy
6
Q
How does the amount of competition affect the price of a product;
A
- External
- Firms will look at competitors prices to match them
- If they set prices too high customers will just choose a competitors product
- if the set price is too low customers will query whether the quality is as good as its competitors
7
Q
Why would a businesses pricing decisions change as it grows
A
- Once it has developed loyal customers and a good reputation it might be able to increase prices without demand falling too much
- economies of scale will also benefit a business which means as a average cost of making each product falls the business can afford to lower its prices
8
Q
A
