Unit 11 - Pricing Strategies Flashcards
Def: pricing strategy
Pricing policy or method used by a business when deciding what to charge for it products
Def: cost plus pricing
Adding a percentage (mark up) to the cost of producing a product to get a price
Def: mark up
Percentage added to unit cost that makes a profit for a business when setting a price
Def: competitive pricing
Matching prices set by rivals
Def: penetration pricing
Setting a low price when launching a new product in order to establish yourself in the market
Def: predatory pricing
Setting a very low price to force rivals out of business
Def: Psychological pricing
Setting a price slightly bellow a round figure
Def: Skimming pricing
Setting a high price at the beginning and then lowering it
Def: product lifecycle
Shows different stages in life of a product and the sales that can be expected at each stage stages on a graph: launch, growth, maturity, decline
What are the pricing strategies (7)
Cost plus
Price skimming
Penetration
Predatory
Competitive
Dynamic pricing - changes based on time…
Psychological
Factors that determine a pricing strategy (6)
Costs and need to make profit
Number of usps and differentiation
Price elasticity of demand
Level of competition
Strength of brand
Stage in product life cycle
