Price

Question 1

what is penetrative pricing

Answer 1

pricing a product at a low level so that
retailers and consumers are encouraged to purchase the
product, main objective to gain market share.

Question 2

what is price skimming

Answer 2

charging a high price for a product that has a unique
selling point (USP) for a limited period. This involves
selling a product to the most profitable segment of the
market before it is sold to a wider market at a lower
price

Question 3

what are advantages of penetrative pricing

Answer 3

This pricing strategy can help establish brand loyalty
– when the price of the product does rise from the
initially low level, customers will continue to purchase
it

Question 4

what are disadvantages of penetrative pricing

Answer 4

However, if the price is set too low, customers may
think that the product is low quality and therefore
they will not purchase it in the first place.

Question 5

why should price skimming be considered

Answer 5

To take advantage of the newness of the product
and gain as much revenue/profit as possible
while it remains unique in the market

Question 6

what is loss leader pricing

Answer 6

This strategy involves the selling of
products at a loss, with the expectation that
this will generate further sales of some form
elsewhere in the business

Question 7

what is psychological pricing

Answer 7

Using this strategy, prices are set
at the level that matches what consumers
may expect to pay, e.g £19.99

Question 8

what is cost plus pricing

Answer 8

a profit percentage
is added to the average cost of producing
the good. This is known as adding a mark-up.

Question 9

what advantages of cost plus pricing

Answer 9

-changes in cost can be passed directly to the buyer
-every good sold is sold at a profit