Pricing policy

Question 1

Importance of pricing

Answer 1

• The pricing process needs to consider flexibility
• Pricing too high may have a negative impact in sales

Question 2

Techniques of pricing

Answer 2

cost based
* placing price directly by cost price
mark up
* calculated percentage
target based
* what businesses and customers are willing to pay
competition based
* based on what competitors are charging their customers
promotional
* special offers
penetration
* sold at very low prices
psychological
* impression that the prodcut is cheaper
bait
* product sold at a lower
skimming
* new product sold at high price

Question 3

Factors that influence price

Answer 3

• Input cost
• Demand for the product
• Target market
• Type of product
• pricing technique to determine the price
• Competitive and substitute products

Question 4

Different type of intermediaries

Answer 4

Wholesalers
* Products are bought in bulk from maufacters
Retailers
* they buy good in large quantities from manufacterer and wholesalers
Agents
* Acts as representatives for manufacteres and wholesalers
Brokers
* Intermidaries who don’t take ownership of the product
Sales representatives
* often employees of the business

Question 5

Reasons why manufacterers may prefer to to make use of direct ditribution

Answer 5

• Manufacteres have control over the product and marketing
• They achieve a better end user price as there are no intermidairy cost

Question 6

Sales promotion

Answer 6

A marketing strategy used to promote products and services through short term initiatives

Question 7

purpose of advertising

Answer 7

Atrract
interest
desire
action

Question 8

Effectiveness of personal selling in promoting a business product

Answer 8

• Improves customer relaionships and customer loyalty
• Increases immediate sales