pricing strategies Flashcards
what is cost plus pricing
add a percentage mark up onto production price
what is competitive pricing
priced in line with competitors
what is skimming/creaming
product priced high when it enters the market as it has high desirability factor
what is penetration pricing
priced low at first to encourage sales, if the product receives high demand then the price goes up
what is predatory pricing
businesses that are currently on the market hold off new businesses with aggressively low pricing
what is psychological pricing
charge products for £3.99 rather than £4 as it appears cheaper to customer
what is an advantage of cost plus
allows the business to identify profit margin
what is an advantage of competitor pricing
business is able to stand out on quality, customer service as that is all customer can judge on
what is an advantage of creaming
business can instantly reach high sales due to desirability, revenue helps pay off production/launch costs
what is an advantage of penetration
customer trusts, likes the product and will therefore pay a higher price once product reaches growth stage e.g biscuit
what is a disadvantage of predatory pricing
business may not be able to afford to cut prices, also illegal
what is a disadvantage of psychological pricing
can make product appear cheap and low quality, some customers are willing to pay higher price for certain products e.g babysit
