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3.3 Marketing performance
3.3.4 The extended marketing mix
Pricing
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What is price?
The money charged for a
product
or
service
Everything that a customer has to give up in order to acquire a
product
or
service
Usally expressed in terms of
£
What are the stages of price setting?
develop pricing objectives ➡️ assess a target markets ability to
purchase
➡️ determine demand for product ➡️ analyse demand, cost and profit relationship ➡️ evaluate competitors prices ➡️ select pricing stratagy and tactics ➡️ decide on
price
What is cost plus pricing?
very
simple
pricing strategy
decide where you decide how much
extra
you will charge for the item over the
cost
What is price skimming?
A relatively
high
price is charges when a product is
first
launched
Top segment is skimmed off first with the
highest
price
Price skimming is most appropriate when demand is
inelastic
What is penetration pricing?
When a business charges a
low
price to gain
market share
Most suitable when demand is sensitive to
price
(
price elastic
)
A low price can gain
high sales
and enable the business to benefit from producing on a
large
scale
What is dynamic pricing?
Occurs when prices are
changing rapidly
in response to changing
demand consitions
Examples;
oil
,
taxis
, stock exchange or panic buying