Food Tech

• What is the purpose of a pricing structure for a company?

  To maximize potential sales and profits
• What are the different pricing strategies a company might use?

  • Bundle Pricing
  • Captive Pricing
  • Geographical Pricing
  • Optional Pricing
  • Penetration Pricing
  • Price Skimming
  • Competitive Pricing
  • Premium Pricing
  • Product Line Pricing
  • Psychological Pricing
  • Value Pricing
• What is bundle pricing?

  It involves selling a group of products together at a reduced price.
• How do supermarkets use bundle pricing?

  They offer 'buy one get one free' promotions to move slow-selling products.
• What is captive pricing?

  It involves offering low prices for main products while charging high prices for supporting products.
• Give an example of captive pricing.


  A coffee machine sold at a low price with high-priced capsules.
• What does geographical pricing refer to?

  It refers to variations in price in different locations due to factors like availability or distribution costs.
• What is optional pricing?


  It involves adding an optional extra item to increase a product's attractiveness.
• Provide an example of optional pricing.


  A customer purchasing herbs may receive a free cookbook.
• What is penetration pricing?

  It is setting a price artificially low to build sales and gain market share.
• What happens to prices after penetration pricing is established?

  Prices are gradually increased after gaining market share.
• What is price skimming?

  It involves setting an initial high price for a unique product to maximize profits.
• When is price skimming typically used?

  When a product is new-to-the-world or has no competition.
• What is competitive pricing?


  It involves setting a product's price to match competitors' offerings.
• What are the three pricing strategies under competitive pricing?

  Higher, the same, or lower than competitors' prices.
• What is premium pricing?

  It involves setting a high price to establish exclusivity and high quality.
• When is premium pricing typically used?

  When a substantial competitive advantage exists.
• What is product line pricing?

  It involves differentiating products in a line based on quality and price.
• How does product line pricing promote purchase of line extensions?

  By creating different quality levels in consumers' minds.
• What is psychological pricing?

  It aims to make consumers respond emotionally rather than rationally to prices.
• How do companies use psychological pricing?

  By making small price changes to create a perception of lower prices.
• What is value pricing?


  It involves providing value products and services in response to external factors.
• Give an example of value pricing.


  Value meals at McDonald's and other fast-food restaurants.
• What are the key considerations for a business when choosing a pricing structure?


  • Covering costs
  • Delivering a reasonable profit margin
  • Assessing customer willingness to pay
  • Matching company image
  • Meeting customer needs and nature
• Why is it important for pricing to match the image of the company?

  To ensure it aligns with customer expectations and perceptions.
• What is the ultimate goal of a pricing structure for a business?


  To deliver profits for the business to survive.