pricing strategies

Question 1

Price

Answer 1

money charged for service/product

Question 2

Stages of setting price

Answer 2

• develop process objectives
• assess target markets ability to purchase
• determine the demand
• analyse demand, cost, profit
• evaluate competitors price
  -select pricing strategie
• decide on price

Question 3

price followers

Answer 3

follow the price changing lead of the market leader

Question 4

price leader

Answer 4

market leaders whose price changes are followed by rivals

Question 5

price makers

Answer 5

fixes their own price

Question 6

price takers

Answer 6

had no option but to charge the market price

Question 7

pricing tactics

Answer 7

adapted in the short run to suit particular situations

Question 8

pricing strategies

Answer 8

adopted over the medium to long run to achieve marketing objectives

Question 9

pricing methods

Answer 9

used to calculate actual price set

Question 10

mark up pricing

Answer 10

costs influence the price

Question 11

mark up pricing adv

Answer 11

-price increase can be justified
-mangers can be confident that they are making a profit for each product

Question 12

mark up pricing dis

Answer 12

-sales are lost if prices are set above/below what the customer is willing to pay
-may not account for competition

Question 13

price skimming

Answer 13

-set at a high price to maximise profits
-creates excitement amongst early adaptors
-sold to different market segments at different times

Question 14

Penetrating pricing

Answer 14

-set at a low price then rises
- build customer loyalty/usage
-price increases when target market share is reached

Question 15

predatory pricing

Answer 15

firms setting low prices to dive out firms already in the industry
- used when competitors threaten to reduce market share

Question 16

Competitive pricing

Answer 16

the business sets its prices based on its competitors prices
- price wars might be good in the short run but harmful in the long.
-process continues unit weaker firms leave

Question 17

psychological pricing

Answer 17

charging a price which ends in pennies to make a person believe that it’s cheaper than it really is

Question 18

loss leader

Answer 18

-product that is displayed and advertised and priced below normal price and even below cost to the seller
- encourages people to buy complementary goods at full prices.
-encourages people to buy other full price products along with loss leader products.

Question 19

dynamic pricing

Answer 19

pricing strategy in which business set flexible prices for products or services based on current market demands