price: pricing strategies

Question 1

what is a pricing strategy?

Answer 1

used to determine what price to charge

Question 2

why are there 5 main strategies?

Answer 2

it depends on the product, level of competition and the demand for products and services

Question 3

penetration pricing:
what is it?

Answer 3

when enterprises ask a low price when the product is launched

Question 4

penetration pricing:
why may enterprise use this?

Answer 4

so more people become interested

Question 5

penetration pricing:
what may a new gardening enterprise offer?

Answer 5

a grass cutting at a low price to start with

Question 6

penetration pricing: advantages
1. what will it gain?
2. what will it boost?
3. what will it encourage?
4. what will it increase?

Answer 6

1. gains interest
2. boosts sales
3. encourages customers
4. increases brand loyalty

Question 7

penetration pricing: disadvantages
1. what will be low?
2. what will happen when sales fall?
3. what will customers think?

Answer 7

1. low profit or selling at a loss
2. sales may fall when the price increases
3. customers may think the product is poor quality

Question 8

skimming:
what is it?

Answer 8

when enterprises ask a high price when the product is launched

Question 9

skimming:
what is one example?

Answer 9

high-tech products such as phones

Question 10

skimming: advantages
1. how does maximising profits help?
2. what will customers think?

Answer 10

1. help cover the development costs
2. that the product is high quality

Question 11

skimming: disadvantages
1. what will customers wait for?
2. what will be low?

Answer 11

1. until the price decreases or buy from competitors who many be cheaper
2. sales

Question 12

competitive pricing:
what is it?

Answer 12

use a similar price to their competitors

Question 13

competitive pricing: where is this often done?

Answer 13

supermarkets

Question 14

competitive pricing: advantages
1. what does it stop?

Answer 14

sales being lost to competitors

Question 15

competitive pricing: disadvantages
1. what does it not allow?

Answer 15

for extras that customers may be willing to pay for

Question 16

cost-plus pricing:
what is it?

Answer 16

when enterprises work out how much the product has cost to make and then add on a percentage of profit

Question 17

cost-plus pricing: what is one example?

Answer 17

restaurants where there is a wide choice of meals on the menu

Question 18

cost-plus pricing: advantages
1. what is it easy to do?
2. what are covered?

Answer 18

1. calculate
2. costs

Question 19

cost-plus pricing: disadvantages
1. how will revenue be lost?

Answer 19

1. when customers would be happy yo pay more for the product

Question 20

premium pricing:
what is it?

Answer 20

enterprises ask a high price for a desirable or luxury product

Question 21

premium pricing: what is one example?

Answer 21

cars

Question 22

premium pricing: advantages
1. how will maximising profits help?
2. what will it boost?

Answer 22

1. to cover the development costs
2. brand image

Question 23

premium pricing: disadvantages
1. why will customers wait?
2. what will be low?
3. what may customers buy from?

Answer 23

1. until the price decreases
2. sales
3. from competitors who may be cheaper