price Flashcards
1
Q
what are eight pricing strategies?
A
- penetration pricing
- promotional pricing
- dynamic pricing
- high/premium pricing
- market/competitive pricing
- low/value pricing
- psychological pricing
- skimming pricing
2
Q
what are the features of penetration pricing?
A
- low price at the start to gain access to the market
- often used when there are close competitors
- price is raised over time
3
Q
what are the features of promotional pricing?
A
- for example a january sale: prices are reduced for a short period of time
- vouchers/offers/discounts are used to encourage customers to buy
- used to quickly sell inventory and aid cash flow
4
Q
what are the featues of dynamic pricing?
A
- prices will vary, low when demand is low, high when demand is high.
- eg, cheap flights at different times of the year
5
Q
what are the features of high/premium pricing?
A
- using a high price deliberately to signal luxury or quality/exclusive image
- sales will be lower but there will be a high profit margin on each sale
6
Q
what are the features of market/competitive pricing?
A
- long term pricing strategy
- setting the price at the same level as competitors and rivals
- the business will then compete on other factors such as convenience, customer services or after sales service
- requires ongoing promotion/advertising
7
Q
what are the features of low/value pricing?
A
- long term pricing strategy
- setting the price below the market price in order to attract customers
- customers will often look for the product that is cheapest as a way of saving money
8
Q
what are the features of psychological pricing?
A
a price which makes the consumer think that a product costs a lot less for example 99p instead of £1
9
Q
what are the features of skimming pricing?
A
- setting a high initial price for the product when it is new or there are few competitors, then lowering it gradually over time
- high profit margins during the introduction stage help recover costs
- effective for new product launches with few competitors
