Marketing Mix - Price

Question 1

What is pricing

Answer 1

Pricing is the process by which a business sets the selling price of its product or services

Question 2

What is price skimming

Answer 2

Products are unique or 1st to market so high price can be charged at introduction
This is so that the business can maximise revenue and profit before substitutes appear

Question 3

What is price penetration

Answer 3

This means setting price is really low for a new product or service to encourage sales and to persuade customers to try the product or service for the first time

Question 4

What is competitive pricing

Answer 4

Some products or services are priced very similar to close competitors
This means that customers will have to judge a product or service on non-price methods

Question 5

What is loss-leader

Answer 5

This involves selling a price at a low or even loss-making price
Although the business may not make a profit selling this product, they could attract customers who also buy other, more profitable products

Question 6

What is Cost plus

Answer 6

Cost plus pricing is work out by calculating the total cost to produce the product or service and then profit is added on top

Question 7

Factors that influence pricing decisions - cost

Answer 7

The cost of a product or need to be taken into account when its price is decided
A business will want to breakeven and make a profit, breakeven is the point where total cost equal total revenue

Question 8

Factors that influence pricing decisions - Degree of competition

Answer 8

The availability of substitute products for the fact business pricing decision
If a business wants to establish and maintain loyal customers it will need to match or have similar prices just competitors

Question 9

Relationship between price and demand

Answer 9

As price fall consumers will demand more and also as price increase consumers will demand less
The higher demand is the higher the price charged can be…