the marketing mix: price

Question 1

why will businesses adopt pricing strategies

Answer 1

• enter new markets
• increase market share
• introduce new product
• make a profit

Question 2

cost plus advantages

Answer 2

• easy to apply
• different mark ups can be applied to different markets and products
• each product earns a profit for the business

Question 3

cost plus disadvantages

Answer 3

• business could lose sales if competitors have lower prices
• no incentive to reduce costs as just passed on to customers as a higher price
• total profit made only if sufficient units sold

Question 4

penetration advantages

Answer 4

• newly launched products can use this to create an impact on consumers
• can increase sales quickly
• can increase market share quickly

Question 5

penetration disadvantages

Answer 5

• lower profits
• if prices are increased later consumers may be resistant
• not appropriate for products with a high quality and reputation

Question 6

price skimming advantages

Answer 6

• establishes the product as one of high quality
• covers development and research costs
• high profits made before competitors try and introduce similar products

Question 7

price skimming disadvantages

Answer 7

• high price may discourage potential customers from buying product
• high price and profitability may lead to competitors entering market

Question 8

competitive advantages

Answer 8

• high sales as realistic price
• avoids price wars
• helps consumers to differentiate between similar products

Question 9

competitive disadvantages

Answer 9

• loss could be made if costs of production greater than that of competitors
• higher quality product may need to be sold at a higher price
• finding out competitors prices is time consuming and expensive

Question 10

dynamic advantages

Answer 10

• caters to different kind of customers so all can enjoy product
• maximises business revenue

Question 11

dynamic disadvantages

Answer 11

• ethical reasons as involves looking into consumers past purchase history and ability

Question 12

promotional advantages

Answer 12

• useful of getting rid of unwanted inventory that will not sell
• can be used to renew interest in products in times of falling sales like economic recession

Question 13

promotional disadvantages

Answer 13

• revenue will be lower due to lower price
• may lead to a price war