PRICE marketing mix

Question 1

what is price

Answer 1

the amount paid by customers for a product

Question 2

factors affecting pricing decisions

Answer 2

-cost of production
-competitive conditions
-competitors prices
-business and marketing objectives
-PED

Question 3

what are the different cost based pricing methods

Answer 3

-mark-up pricing
-cost-plus pricing
-contribution-cost

Question 4

mark-up pricing

Answer 4

adding a fixed mark-up for profit to the unit cost of buying in a product

Question 5

cost-plus pricing

Answer 5

setting a price by calculating a total unit cost for the product and then adding a fixed profit mark-up

Question 6

contribution- cost pricing

Answer 6

setting prices based on the variable costs of making a product, in order to make a contribution towards fixed costs

Question 7

what is a loss leader

Answer 7

setting a low price below cost of in brought materials

(aims to attract customers that buy their other products which will cover the lost costs

Question 8

what are the competition based pricing methods

Answer 8

-competitive pricing
-price discrimination
-dynamic pricing

Question 9

competitive pricing

Answer 9

making pricing decisions based on the price set by competitors

Question 10

reasons why competitive pricing may be adopted

Answer 10

their is a price leader, difficult to put a higher price
price war could occur in markets where businesses are similar in size and products so are similar

Question 11

price discrimination

Answer 11

charging different groups of consumers different prices for the same good or service

Question 12

dynamic pricing

Answer 12

offering products at a price that changes according to the level of demand and the customers ability to pay

(usually online)

Question 13

pricing methods for new products

Answer 13

penetration pricing (SEE BOOK)
market skimming

Question 14

penetration pricing

Answer 14

setting a relatively low price to achieve a high volume of sales

(used when attempting mass marketing to gain market share)

Question 15

marekting skimming

Answer 15

setting a high price for a new product when a firm has a unique or highly differentiated product with low PED

Question 16

Psychological pricing

Answer 16

setting a price at a level which matches consumers views about a products perceived value

Question 17

applications of psychological pricing

Answer 17

1. setting price below key price levels in order to make the price appear lower than it is ($1.99)
2. market research to ensure price meets perceived views on product

Question 18

what are the evaluation points of pricing decisions

Answer 18

• a business won’t use the same pricing method for all their products
• consumers value quality more than price

-Price influences consumer behaviour

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