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Business Studies > Price > Flashcards

Price Flashcards

1
Q

Why do you need to research on price?

A
  • need to know the prices of competitors
  • need to know what the retailers sold - product line
  • need to know what customers would buy for good value for money
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2
Q

What is psychological pricing?

A

Psychological pricing is thinking something is cheaper than it actually is/thinking you’re saving money.

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3
Q

What is pricing?

A

Pricing is deciding what price to set for products or services.

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4
Q

What is price

A

Price is what the buying it prepared to pay in exchange for a product or service.

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5
Q

Give an example of a fee:

A

Car parking

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6
Q

Give an example of a fare:

A

Bus

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7
Q

Give an example of a rent:

A

Property

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8
Q

Give an example of subscription:

A

Netflix

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9
Q

How do businesses set their prices?

A
  • competition
  • cost of product
  • what the customer is willing to pay
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10
Q

What are pricing strategy?

A

Pricing strategy is how to set the price.

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11
Q

What is cost-plus pricing?

A

Total cost of producing a product by adding together fixed and variable costs.

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12
Q

What is competition pricing?

A

Setting the price for a product based on the price charged by their competitors.

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13
Q

What is penetration pricing?

A

Setting a low price for a product to persuade customers to buy it.

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14
Q

What is skimming/creaming pricing?

A

The high price for a unique product when it is first introduced.

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15
Q

What is a lost leader?

A

Selling a product for less than what it costs to produce.

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16
Q

What is promotional pricing?

A

Reducing the price of a recognised product for a certain amount of time to interest customers into buying it.

17
Q

What are the advantages of cost-plus pricing?

A
  • can be flexible around the objectives of the business
  • its quick and simple of calculate
  • it ensures that the retailer covers the cost of buying the product from the manufacturer and makes a profit
18
Q

What are the disadvantages of cost-plus pricing?

A
  • if the percentage is too low it may mean a lost opportunity to make a profit
  • if the percentage is too high, it will reduce sales
19
Q

What are the advantages of competition pricing?

A
  • it’s a safe strategy because it avoids price competition which can be damaging to a business.
  • prices will be competitive
20
Q

What are the disadvantages of competition pricing?

A
  • businesses have to find other ways of attracting customers

- the competitive price may only just cover the cost of the product

21
Q

What are the advantages of penetration pricing?

A
  • achieve a sudden spurt in the market share

- low prices are set so the business can break into the market

22
Q

What are the disadvantages of penetration pricing?

A
  • pricing may be too low so they could lose sales

- it doesn’t help to recover research and development costs

23
Q

What are the advantages of skimming/creaming?

A
  • maximise value added or profit margins

- establish a prestigious brand name

24
Q

What are the disadvantages of skimming/creaming?

A
  • the price set could be too high meaning people won’t buy the product
  • have to be sure you have an innovative idea that you can sell easily
25
Q

What are the advantages of a loss leader?

A
  • customers may buy other products from which a great product is found
26
Q

What are the disadvantages of a loss leader?

A
  • customers may not buy the accessories along with the product
27
Q

What are the advantages of promotional pricing?

A
  • it can help to renew customers interest in products with falling sales
  • it earns revenue on goods which are no longer popular
28
Q

What are the disadvantages of promotional pricing?

A
  • sales revenue will be lower

- when used to renew interest in a product it can be very risky venture if sales do not rise

Business Studies (18 decks)

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