Pricing strategies Flashcards

1
Q

What is the aim of predatory/destroyer pricing?

A

Eliminate competitors from market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

How do businesses Predatory/Destroyer price?

A

Business sell products - below cost of production - period of time - until one or more rivals leave market.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What does illegal predatory/destroyer pricing involve

A

Selling products below cost of production

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Why is illegal predatory/destroyer pricing outlawed?

A

[Long term effect]

Lack of competition in market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

When is predatory/destroyer pricing allowed?

A

Low-cost businesses - prepared to endure low profits - extended period of time.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is competitive pricing?

A

Charging very similar price as competitors

after studying competitor pricing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

In which type of market does competitive pricing occur?

A

Fiercely competitive markets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Give approach 1 of competitive pricing.

Give an advantage of this approach.

A

Charging same price as competitors.

>Price war = likely to be avoided
safe pricing strategy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is competitive pricing approach 2 called?

A

Price leadership

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Define price leadership.

A

Market leader sets price

>competitors follow.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Price leaders are usually

A

Market leaders/Dominant firms in market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

How may price leaders have developed their dominance?

Give 2 possible reasons.

A
  • Low-cost operator

- Building strong brand over time

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Define pyscological pricing.

Give an example.

A

Setting price slightly below round figure

e.g £99.99 instead of £100.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Why might businesses use psychological pricing?

State an advantage of this.

A

Tricks consumers -believing product is cheaper.

>demand - more likely to increase (particularly from bargain hunters)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly