Pricing Strategies Flashcards

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Flashcards covering various pricing strategies discussed in the lecture notes.

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12 Terms

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Penetration Pricing

Pricing a product at a low level to encourage large quantities purchase; used to gain market share.

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Price Takers

Businesses that must accept the price set by the market, common in perfect competition.

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Price Makers

Businesses that can use pricing strategies because they are not bound by a set market price.

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Market-Orientated Strategies

Market-oriented businesses set a price at the level the market is willing to accept.

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Cost-Based Strategies

Businesses concentrate on internal costs when pricing products are known as product-orientated businesses; strategies are based around production costs.

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Price Skimming

Charging a high price for a product with a unique selling point (USP) for a limited period.

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Destroyer/Predatory Pricing

Setting a price low enough to drive competitors out of the market; often seen as anti-competitive and illegal.

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Going Rate Pricing

Accepting the current market pricing structure; selling goods or services at a price in line with competitors.

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Loss Leader Pricing

Selling products at a loss to generate further sales elsewhere in the business.

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Psychological Pricing

Setting prices at the level that matches what consumers expect to pay, creating a perception of value.

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Contribution Pricing

Price will be based on the variable costs plus a contribution towards overheads and profits.

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Cost Plus Pricing

Adding a profit percentage to the average cost of producing the good; known as adding a mark-up.