The marketing mix- Price Flashcards
Describe the cos plus pricing strategy
When a % of profit is added on to the cost of purchasing a product
Justify cost plus pricing strategy
simple to work out prices as the same % is added to all products
Describe penetration pricing strategy
When a business charges a low price when a product is first introduced onto the market
development- once customer loyalty is established the price is increased
Justify penetration pricing
To increase customer awareness or to increase sales
What is a disadvanatge to penetration pricing
some customers will stop buying the product when the price rises
Describe destroyer pricing
When a large plc deliberately sell their products at a price much lower than competitors
developement- prices are then increased higher than the original price
Justify destroyer pricing
Competitors are forced out of the market as they cannot compete
What is a disadvantage to destroyer pricing
Customers are faced with price rises
Describe promtional pricing
When a business reduces the price o its products for a short amount of time
Justify promtional pricing
Helps the business reduce stock levels at the end of a season
What is a disadvanatge to promtional pricing
Customers often wait to purchase products at times of discount
Describe loss leaders
When a business deliberately sells a product lower than the cost price
development- highly advertised to five the impression that all products are inexpensive
Justify loss leaders
Most customers would buy other products whilst in the store resulting in a profit bring made from the custoemrs whole purhcase’gives the impression that all products are inexpensive
What is a disadvantage to loss leaders
Some customers will only purchase the discounted product
Describe psychological pricing
When the price of a product ends in 99p
