Edexcel-pricing strategies

Question 1

price

Answer 1

Money charged for a product or service.

Question 2

Financial objectives that impact price

Answer 2

Maximise profit
Improve cash flow

Question 3

Marketing objectives that impact price

Answer 3

Maintain market share
Prevent competition

Question 4

Cost and pricing

Answer 4

Over time price must be more than costs for profit.

Question 5

Mark up

Answer 5

Popular method of cost based pricing
Ratio between costs of goods and selling price
Expressed as percentage

Question 6

Adv of cost to influence pricing

Answer 6

Easy to calculate
Price increases justified when costs rise
Managers confident each product has profit

Question 7

Dis of cost to influence pricing

Answer 7

Ignores price elasticity demand
May not take account competition
Profits lost if price set below what customer wants

Question 8

Price skimming

Answer 8

set products to high prices

Question 9

Price skimming objective

Answer 9

Maximise profit to achieve recovery of costs

Question 10

Price penetration

Answer 10

Offer product at low inductory price

Question 11

price penetration aims

Answer 11

Gain market share so they can put product to a normal price
Build customer loyalty
Build sales of high priced items

Question 12

Predatory pricing

Answer 12

Dominant undertaking incurs losses with hopes of removing potential competitors

Question 13

Price wars/ competitive pricing

Answer 13

Competitive price reduction by firms in competitive industry

Question 14

Psychological pricing

Answer 14

change prices to end 99p so perceived as cheaper

Question 15

Loss leader

Answer 15

A product predominantly displayed and advertised as below normal price and cost to seller.

Question 16

Loss leader aims

Answer 16

Encourage people to buy complementary goods at full price

Question 17

Dynamic marketing

Answer 17

Pricing strategy where businesses set flexible prices for products or services based on current market demands.

Question 18

Dynamic marketing eg

Answer 18

Taxis
Holidays

Question 19

predatory pricing aims

Answer 19

Seek to increase market share
Good for customers short term but long term all competitors removed

Question 20

price wars/ competitive pricing effect

Answer 20

may seem good to consumers in short run but is harmful if all competitors are removed

Question 21

Premium pricing

Answer 21

When goods are sold at high prices
Tend to have ups to sell at these prices.

Question 22

Benefits of dynamic marketing

Answer 22

Maximise profits
Get rid of unsold stock
Treats customers more individually

Question 23

Online sales

Answer 23

Businesses sell products and services online.

Question 24

Online sales advantages

Answer 24

Convenience as accessible 24/7
Reach new markets

Question 25

Online sales disadvantages

Answer 25

Lots of competition
Can be complicated

Question 26

Price comparison sites

Answer 26

Used to compare products based on price, features and reviews.

Question 27

Price comparison sites advantages

Answer 27

Keep up to date with prices
Find out what different competitors are selling

Question 28

Price comparison sites disadvantages

Answer 28

Loose consumers if they are not the cheapest business.
Other competitors can find out all their information