Edexcel Business Topic 2.2.2! Flashcards
Page 6
2 Types of pricing strategy
- High Volume Pricing Strategy
- High Margin Pricing Strategy
What is High Volume Pricing Strategy
Producing a lot of product at low cost
Why is High Volume Pricing Strategy possible for businesses
- Think about why you can mass-produce at low cost
ECONOMIES OF SCALE
What is Economies of Scale
Average cost of production falls as business increase the amount of products.
What types of product are best at High Volume Pricing Strategy
Give 2
- Simple Product
- Standarlized product
List 1
Benefits of High Volume Pricing Strategy
Allow businesses to reduce promotion cost!
What is High Margin Pricing Strategy
Selling in LOW quantities but charging PREMIUM PRICE for it
Why can’t u sell in high quantities for High margin pricing strategy?
Reduce customer’s impression that the product/s is exclusive
2 Main influences on Pricing Strategies
- Competition
- Product Life Cycle
How can COMPETITION influences on pricing strategies
When HIGH COMPETITION, business might need to REDUCE the price
4 stages of Product Life Cycle
- Introduction
- Growth
- Maturity
- Decline
IGMD
What pricing strategies is common at stage 1: Introduction!
Product Life Cycle
Dun have to be high margin/high volume!
At introduction, LOW prices to attract buyers
What pricing strategies is common at stage 2: Growth!
Product Life Cycle
Dun have to be high margin/high volume
Price increases to true value!
What pricing strategies is common at stage 3: Maturity!
Product Life Cycle
Dun have to be high margin/high volume!
HIGH prices will be set
What pricing strategies is common at stage 4: Decline!
Product Life Cycle
Dun have to be high margin/high volume
Extension Strategies!
