Business - Pricing Strategies
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Last updated 5:30 PM on 2/26/25
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10 Terms
1
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What is penetration pricing?
A strategy where a business offers a low initial price to increase market share.
2
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What is a potential downside of penetration pricing?
It can lower short-term profits.
3
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What is a loss leader?
A product sold at a loss to attract customers hoping for additional purchases.
4
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Why do businesses use loss leaders?
To attract new customers or encourage existing customers to buy more.
5
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What is competitive pricing?
Setting prices based on what other firms in the market are charging.
6
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When is competitive pricing typically used?
When products in a market are similar.
7
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Provide an example of a market where competitive pricing is common.
Petrol sold at petrol stations.
8
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What is cost-plus pricing?
A strategy where a business charges based on production cost plus a markup.
9
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How does cost-plus pricing work?
Calculate production costs, then add a markup to ensure gross profit.
10
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Give an example of cost-plus pricing.
If a tyre costs £80 and a 25% markup is added, it sells for £100.
