Pricing Strategies

Question 1

Pricing strategy

Answer 1

Are the pricing policies or methods used by a business when deciding what to charge for its products

Question 2

Cost plus

Answer 2

Adding a mark up to the unit costs to make a price. The mark up will be a percentage of unit costs

Question 3

Price skimming

Answer 3

Setting a high price initially and then lowering it later

Question 4

Penetration pricing

Answer 4

Involves setting a low price when launching a product to become established in the market.

Question 5

Predatory pricing

Answer 5

Setting a very low price for a period of time until one ore more rivals leave the market

Question 6

Competitive pricing

Answer 6

Looking at what competitors are pricing and basing their prices of that. Usually used in a fiercely competitive market

Question 7

Price leadership

Answer 7

Is when the market leader sets the price and other firms copy this strategy

Question 8

Psychological pricing

Answer 8

Slightly below a round figure, such as £99.99 instead of £100 to make consumers think it is cheaper

Question 9

Factors that determine the most appropriate pricing strategy

Answer 9

> PED
strength of the brand
costs and need to make a profit
amount of competition

Question 10

Changing in prices to reflect social trends

Answer 10

> online sales

>price comparison sites