Pricing strategies Flashcards
what is penetrating pricing?
increasing the price over time
what is a company that uses penetration pricing?
Starbucks
what is skimming pricing?
decreasing prices over time
what is a company that uses skimming pricing?
Apple
what is competitive pricing?
setting prices based on competitors prices
what is a company that uses competitive pricing?
Amazon
what is premium pricing?
pricing higher than competitors
what is a company that uses premium pricing?
Rolex
what is cost-plus pricing?
the making of a product plus a percentage of that
what is a company that uses cosy-plus pricing?
Tesco
what are some advantages of skimming pricing?
create a high-end brand image, increase customer loyalty, and provides money for product development
what are some disadvantages of skimming pricing?
customers may become turned off by the price decrease, doesn’t work if competitors are doing similar, and may end up with excess inventory if it fails
what are some advantages of penetration pricing?
increase customer interest, reduce competition, and word-of-mouth marketing
what are some disadvantages of penetration pricing?
poor customer experience, potential damage to brand, and in market price wars
what are some advantages of competitive pricing?
helps businesses understand their market position, attract new customers, and boost profits
what are some disadvantages of competitive pricing?
it can be inaccurate, doesn’t focus on customers, and potential loss of profit
what are some advantages of premium pricing?
boots profitability, improves company reputation, and increases price flow
what are some disadvantages of premium pricing?
customers expect more when they pay more, requires a USP/consumer demand, and tricky to get right with so many varying factors at play
what are some advantages of cost-plus pricing?
easy to calculate, clearly sustainable, and easy to explain to customers
what are some disadvantages of cost-plus pricing?
doesn’t really reflect market decisions, may not reflect true value of p/s, and may miss out on opportunities to maximise revenue
