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price marketing
| Question | Answer |
|---|---|
| cost plus pricing | cost of manufacturing product + profit mark up |
| cost plus pricing ++++ | + easy to apply +diff profit mark ups in diff markets +each product earns profit for business |
| cost plus pricing - - - | - business lose sales if selling price is higher than competitors -total profit only made of sufficient units are sold -no incentive to reduce costs |
| competitive pricing | when product is priced in line or just below competitors prices to capture more of market |
| competitive pricing + + + | +sales are likely to be high, as price is realistic +avoids price competition, can reduce profits for all businesses in industry +often used when difficult for consumers to tell difference between products of diff business |
| competitive pricing - - - | >if costs for product for a business = higher, losses > higher quality product might need to be sold at price above competitors prices to give a higher quality image >detailed research needed to set price correctly (takes time and money) |
| penetration pricing | when pricing is set lower than competitors prices in order to be able to enter new market |
| penetration pricing + + + | +often used for newly launched products +should ensure sales are made +makret share should build up quickly |
| penetration pricing - - - | -sold at low price and profit per unit = low -customers = used to low prices and reject when higher -might not be appropriate for branded product |
| price skimming | price is set high for new product on market |
| price skimming + + | +helps establish product as being of good quality +hugh research and development costs = rapidly recouped +if product is unique, profits made before competitors launch similar products |
| price skimming - - - | - the high price may discourage some potential customers from buying -high price and high profitability attracts competitors |
| promotional pricing | when product is sold at very low price for short period of time |
| promotional pricing + + | + getting rid of unwanted inventory that won’t sell +help renew interest in a product of sales are failing |
| promotional pricing - - - | - revenue = lower because price of each item = reduced -might lead to a price competition with competitors (business might have to reduce prices again) |
| dynamic pricing | when business change product prices, usually when selling online depending on level of demand |
| price elastic demand | where consumers are very sensitive to changes in price |
| price in elastic demand | where consumers are not sensitive to chnages in price |
Created by:
elisseu
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