Price

Question 1

Why is setting price an important decision?

Answer 1

The price is too high customers may not want to buy and this can lead to a fallen demand and therefore fall revenue
the price is too low. Customers may not think it’s good value for money and they may get more sales but it isn’t enough to cover the cost which means that there’s a low profit margin.

Question 2

What are factors that influence selling price

Answer 2

Cost of labour
competition
other costs for example rent ,raw materials
positioning
PED
other the elements of the marking mix
state of economy

Question 3

What are the market base pricing strategies?

Answer 3

Penetration
Skimming/creaming
Dynamic pricing
Premium pricing
Discrimination
Loss leader
Competitive
Psychological

Question 4

What are the cost based pricing strategies?

Answer 4

Contribution -the variable costs are covered with the selling price for the fixed costs are only covered when enough products are sold. Useful in a heavy comp competitive market for new products who are trying to establish themselves in the market.
Cost plus covering all cost of making the products and adding on a markup in order to make a profit this is a common pricing strategy as often in the main objective of a businesses to make a profit

Question 5

Describe discounting

Answer 5

Discounting an effective pricing strategy/sales promotion it helps clear access stock quickly and it’s essentially retail before the new season collection can be brought out provides an instant abuse to revenue which may help if there are cash flow issues