Topic 9 Pricing Flashcards
1
Q
What factors influence the price of a product?
A
1) Company factors e.g the available resources
2) Market factors e.g competition, consumer perception, distribution costs
3) Environmental factors e.g exchange rates
2
Q
What is price elasticity of demand?
A
- Measures the effect of price change on demand
3
Q
How do you calculate PED?
A
% change in quantity demanded divided by % change in price
4
Q
What is the break even point?
A
- Point at which you are no longer making a loss nor are you making a profit
5
Q
What are the three types of pricing?
A
1) Skimming
2) Penetration
3) Psychological
6
Q
What is price skimming?
A
Prices are set high to attract the least price sensitive in the market
- Appeals to opinion leaders who want the product first regardless of price
7
Q
Whats penetration pricing?
A
- Pricing aggressively below completion to attempt to gain a large market share
- Risky as may make people establish it with a poor brand image
8
Q
What is psychological pricing ?
A
- Using numbers such as £1500 rather than pricing with a 99p at the end
- Selling in bundles
- Odd even pricing e.g £2.99 rather than £3
9
Q
Whats price differentiation?
A
- Pricing differently at different distribution s
