3.4e Pricing Decisions Flashcards Preview

Business Studies AS > 3.4e Pricing Decisions > Flashcards

Flashcards in 3.4e Pricing Decisions Deck (10):
1

How does penetration pricing work?

A low price is used to enter the market and build up loyalty, once consumers are loyal the price is raised.

2

When would penetration pricing work?

In highly competitive markets and when products lack differentiation

3

How does price skimming work?

High price is charges when a new product enters the market and price is lowered later

4

How does competitive pricing work?

Prices reflect what the competition is charging

5

How does predatory pricing work?

Businesses use deliberately low prices in order to put the competition out of business.

6

How does loss leader pricing work?

Product is sold below cost in order to attract customers to buy other products sold by the firm.

7

How does psychological pricing work?

Price is set at a price that seems psychologically lower than it is e.g. £1.99 instead of £2

8

What is psychological pricing also known as?

Odd number pricing

9

What does cost-plus pricing involve?

Price being set as the average cost of a product plus a sum to ensure a profit

10

Influences on pricing decisions

- Costs of product
- Competitors
- Target market

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