Theme 1 Topic 16 - Pricing Strategies

Question 1

Define Price

Answer 1

The amount of money for which something is exchanged

Question 2

Define Price Skimming

Answer 2

High starting price to maximise profit but may decrease over time

Question 3

Define Penetration Pricing

Answer 3

Low starting price to gain market share and build customer loyalty but may decrease over time

Question 4

Define Competitive Pricing

Answer 4

All similar producers charge a similar price

Question 5

Define Cost Plus Pricing

Answer 5

Total cost of a product plus a % mark up

Question 6

Define Predatory Pricing

Answer 6

Charging lower prices to get rid of competition in a market and increase market share

Question 7

Define Psychological Pricing

Answer 7

Price based on customer expectations, they may believe a product is cheaper than it is (e.g. 99p) or think a high price makes a product better

Question 8

What three pricing strategies are suitable for introducing a new product?

Answer 8

Price skimming, Penetration pricing, Competitive pricing

Question 9

Define Price Comparison Sites

Answer 9

Created a climate of competitive pricing, by showing customers the best deals on items

Question 10

Define Showrooming

Answer 10

Viewing products in a shop and then ordering cheaper online

Question 11

Define Dynamic Pricing

Answer 11

Pricing at a perceived level that customers are willing to pay

Question 12

What does technology enable?

Answer 12

Quick price changes when circumstances affecting demand change