Price Flashcards
All 9 cards in this deck
What is price skimming?
Setting a high price when a product is new or unique, then lowering it later as competition increases.
What is price penetration?
Setting a low price when entering a market to attract customers and gain market share, then raising it later.
What is competitive pricing?
Setting prices in line with, or just below, those charged by competitors for a similar product.
What is a loss leader?
A product sold below cost to attract customers, in the hope they buy other, profitable products as well.
How can technology influence the pricing strategy a business chooses?
Price comparison sites and online shopping let customers compare prices instantly, pushing businesses towards lower, more competitive prices.
How does competition influence a business's pricing strategy?
In a competitive market a business must price close to what rivals charge, or customers will switch; with little competition it can charge more.
How do market segments influence a business's pricing strategy?
Different segments are willing to pay different amounts, so a business can charge higher prices to one segment and discounted prices to another.
How does the product life cycle influence pricing?
Skimming or penetration is used at introduction, while prices are usually cut in maturity and decline as competition grows.
True or false? Lowering the price will always increase a business's revenue.
False. If the extra customers gained do not offset the lower price, revenue falls and losses can increase.