price

Question 1

what is penetration pricing?

Answer 1

-low initial price
-aim of gaining market share
-price increases after initial offer
-get as many customers as possible to try the new product
-used to enter a market where there is lots of competition, e.g. new fast food bsuiness

Question 2

what is price skimming?

Answer 2

-high price at launch
-often product has a USP or competitive advantage
-high demand
-price reduces in line with demand
- e.g.) appropriate for new iPhone

Question 3

what is psychological pricing?

Answer 3

-price appears substantially cheaper
-99p instead of £1
-some customers may not be convinced of this strategy

Question 4

what is premium pricing?

Answer 4

• high selling goods
  -competitive advantage
  -high demand
  -luxury

Question 5

what is competitor pricing?

Answer 5

-going rate
-very common in competitive markets
-price based on competitors
-may lose money and customers

Question 6

what is cost plus pricing?

Answer 6

-product cost +profit margin= selling price
-doesn’t consider market or competitors

Question 7

what is loss leader pricing?

Answer 7

• sold at a loss cost to attract customers to the store
  -can be expensive
  -often done on a staple product like bread

Question 8

what is predatory pricing?

Answer 8

-prices kept low to drive competitors out of the market
-involved in local and national businesses

Question 9

what is promotional pricing?

Answer 9

-sales and discounts can be used
-encourage sales
- reduction of profit

Question 10

what are the positives of using a pricing strategy?

Answer 10

-take account of competitors
-increase of: sales, revenue and profit
-symbolises value

Question 11

what are the negatives of using a pricing strategy?

Answer 11

-competitors may not follow pricing strategy so it will effect your customers and revenue
-expensive advertisements to promote pricing strategy