price

Question 1

skim pricing

Answer 1

A product pricing strategy where a business charges the highest initial price that customers will pay and then lowers the price over time.

Question 2

example of skim pricing

Answer 2

the latest Sony PlayStation was set at a high price when first on the market and early adopters were keen to buy it at a higher price. Once competition came onto the market, the price dropped

Question 3

penetration pricing

Answer 3

Where a product or service is set at a lower than market price to enter a competitors moving into the same market segment. Caution must be used to avoid price wars or cheapening the company’s image

Question 4

example of penetration pricing

Answer 4

a new internet provider will offer lower prices than competitors to establish a customer base and, once established and secure, will tend to raise their prices to be more in line with other providers

Question 5

premium/prestige pricing

Answer 5

When the price of a product or service is significantly higher than similar competing products.

Question 6

example of premium/prestige pricing

Answer 6

Mercedes is considered a prestigious vehicle worth paying a premium price to have. Consumers perceive Mercedes cars as premium products that give them a sense of prestige when driving

Question 7

psychological pricing

Answer 7

A pricing strategy where a business sets a price slightly lower than a whole figure such as $399 instead of $400

Question 8

example of psychological pricing

Answer 8

a lounge suite priced at $2999 seems cheaper than a lounge suit priced at $3000