Internal & external factors influence

• What are the two types of factors affecting pricing decisions?

  Internal and external factors
• What does it mean for a pricing decision to be internal?

  It is controlled by the business
• How does business growth affect pricing decisions?

  It may change pricing strategies and objectives
• How does increasing market share influence pricing strategy?

  It may lead to reduced prices
• What pricing strategy might a business use to increase market share?

  Penetration pricing
• What happens to pricing strategy as a business shifts from market share to profit maximization?

  It may change from penetration to competitive pricing
• What production technique change can affect pricing decisions?

  From job production to flow production
• How does flow production lead to economies of scale?

  It reduces average cost per unit
• What is the product life cycle?

  Stages a product goes through in the market
• What are the phases of the product life cycle?

  1. Introduction
  2. Growth
  3. Maturity
  4. Decline
• What pricing strategy is often used in the introduction phase of the product life cycle?

  Price skimming
• What pricing strategy might be used during the growth stage?

  Penetration pricing
• What pricing strategy is typically employed in the maturity phase?

  Competitive pricing
• What pricing strategy could be used in the decline phase?

  Loss leader pricing
• What is product differentiation?

  Making a product stand out from competitors
• How can product differentiation affect pricing?

  It may allow for increased prices
• What is a key external factor affecting pricing decisions?

  Competition
• How does competition influence pricing in a market?

  It may require reducing prices
• What happens to pricing when market share increases?

  There may be fewer competitors
• How does brand loyalty affect pricing decisions?

  It may allow for price increases
• What is the relationship between price and demand?

  Higher prices may lead to lower demand
• How do raw material prices affect pricing decisions?

  Increased costs may lead to higher prices
• How do exchange rates impact pricing decisions?

  They affect costs of imported materials
• What is the effect of a booming economy on pricing?

  It may allow for price increases
• What happens to pricing during a recession?

  Prices may need to be reduced
• What are the internal and external factors affecting pricing decisions?

  Internal factors:

  • Business objectives
  • Production techniques
  • Product life cycle
  • Product differentiation

  
  

  External factors:

  • Competition
  • Brand loyalty
  • Supply costs
  • Exchange rates
  • Economic conditions
• Why is it important to relate pricing decisions to pricing strategies?

  To ensure effective market positioning
• What is the goal of pricing decisions as a business grows?

  To adapt to changing market conditions