32 - Using The Marketing Mix - Pricing

Question 1

Price skimming

Answer 1

Entering a market with a high price to attract early adopters and recoup high development costs.

Question 2

Penetration pricing

Answer 2

Below market pricing to gain a foothold in an established and competitive market.

Question 3

Price leader

Answer 3

A product that has significant market share and can influence the market price.

Question 4

Price taker

Answer 4

A firm which sets its prices at the same or similar level to those of the dominant firm in the industry.

Question 5

Pricing tactics

Answer 5

The manipulation of price to achieve a specific short term objective. Eg to increase market share or to increase the sales of a product range.

Question 6

Loss leaders

Answer 6

Products sold at less than cost to attract customers to a product range.

Question 7

Psychological pricing

Answer 7

The use of odd number pricing to increase the value-for-money appeal of a product.

Question 8

Price elasticity of demand

Answer 8

The responsiveness of demand for a product to a change in its price.

PED = %change in demand
% change in price

Question 9

Pricing strategies

Answer 9

Long-term pricing plans which take into account the objectives of the business and the value associated with the product.