1.3.3 pricing strategies

price

the amount of money that a customer has to pay to receive the good/service

pricing strategies

cost plus, price skimming, penetration, predatory, competitive, psychological

cost plus pricing

% markup of cost

price skimming

setting high price then lowering

penetration pricing

low price to gain advantage, then increase

predatory pricing

low price to get rid of competitors, then set higher

competitive pricing

prices are same or lower than competitors so compete based of marketing mix

psychological pricing

setting prices so seems cheaper (3.99)

price leaders

firms that dominate a market and set prices for existing products

price takers

smaller firms that set their prices based on price in the market

factors determining choice of pricing strategy

number of USPs, PED, level of competition, strength of a brand, stage in the product life cycle, costs and need to make a profit

changes in pricing to reflect social trends

online sales have led to dynamic pricing, price comparison websites