3.3 pt2 Flashcards

1
Q

Distinguish difference between predatory and psychological pricing

A

predatory - a dominant business incurs a loss with the intention of removing a rival business e.g setting price from 60p to 10p Psychological pricing - deceiving people into believing that a product is way cheaper than it actually is e.g 99p instead of £1

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2
Q

Cost plus pricing

A

calculating the full cost of a product plus a % mark up - tc + profit margin to set a price of a good

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3
Q

Calculation for mark up

A

labourers job cost £4000 he wants a mark up of 25% - 25% of £4000 = £1000

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4
Q

contribution pricing

A

setting a price which covers minimal cost and therfore make a contribution to fixed costs - usually used to increase capacity

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5
Q

price discrimination

A

charging different prices to different segments of the market, based on customer willingness to pay

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6
Q

2 methods of new product pricing

A

Skimming - setting high price to maximise profit penetration - introducing a new product at a lower price compared to competitors

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7
Q

prestige pricing

A

High price to enhance or reinforce a products quality

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8
Q

3 purposes of promotion other than increasing sales an attracting new customers?

A

-encourage customer loyalty -create awareness -encourage brand switching

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9
Q

Personal selling

A

promotion on a person to person basis e.g telephone, meetings, knocking on doors - high customer attention dis adv -labour intensive

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10
Q

Sales promotion

A

tactical point of sale material designed to stimulate purchases e.g 50% off

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11
Q

Merchandising

A

process of maximising the effectiveness of retail distribution

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12
Q

Sponsorship

A

takes place when a payment for an event, person, organisations is given in return for some consideration of benefit

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13
Q

direct marketing

A

promotional material directed through mail, email or telephone to a household or businesses

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14
Q

viral marketing

A

consumer being encouraged to share a companys good or service via the internet

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15
Q

branding

A

The process involved in creating a unique name and image for a product in the consumers’ mind

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16
Q

2 factors which determine the mix of promotional activities used

A

Stage in product life cycle - advertising may be important for the early stages of a product competition - what are competitors doing? what promotional methods re traditionally effective in this market

17
Q

What are 3 meanings of place

A

-where a product is sold -How a product is sold -how the product gets from the producer to the consumer

18
Q

What is channel distribution

A

A distribution channel moves a product from production to consumption

19
Q

what is intermediary in the channel of distribution and explains the roles of the 3 different types

A

and intermediary is each party in the distribution channel. the 3 types are the 1)whole salers (break bulk) 2) distributors - sell on products and serve as local sale points (b2b) 3)agent - specialist type of distributor (doesn’t hold stock)

20
Q

Explain with examples what is meant by an integrated market?

A

integrated marketing mix - each one of the 7Ps is contributing, consistently for the success of the business. e.g high quality clothes such as Gucci would not sell in a shop like top man as it doesn’t aim for the right customer

21
Q

calculate profit?

A

TR - TC

22
Q

Where can you find break even on a graph?

A

when total revenue line and total cost line intersect

23
Q

Break even formulae

A
24
Q

margin of safety formulae

A
25
Q

total contribution formulae?

A

total sales - total variable costs