Price

Question 1

Different pricing straegies used by businesses

Answer 1

Pricing at a Premium. With premium pricing, businesses set costs higher than their competitors.

Premium pricing is often most effective in the early days of a product’s life cycle.

Price Skimming
Price skimming involves setting rates high during the introductory phase.

Loss leader - Sold to a loss to attract customers

Destoyer pricing - Setting the price low to eliminate competition and then making the price higher

going rate pricing - accepting the value

Discrimination pricing - having different prices for different segments of the market

Psychological pricing - making the customer think the price is lower

Question 2

Use of each type of pricing strategy

Answer 2

Price skimming - draw customers to your brand with low prices

Price at premium - cover the costs of a high value product

Discrimination pricing - Draw certain customers to your brand

Destroyer pricing - Ensures a loyal customer base

Loss leader - Draw customers into buying other products