Pricing Strategies Overview - IAL (Edexcel) Unit 1

These flashcards cover the key concepts and definitions related to pricing strategies discussed in the lecture, aiding in exam preparation.

What is a pricing strategy?

A set of plans about pricing that helps a business achieve its marketing objectives.

What factors should be considered when setting a price?

The rest of the marketing mix, strength of the brand, number of competitors, and market segment being targeted.

What is cost-plus pricing?

Setting a price based on the cost of making a product plus a profit mark-up.

What is competitive pricing?

Setting a price in line or just below competitors’ prices to capture more of the market.

What is penetration pricing?

Setting a price lower than competitors’ prices to enter and establish a product in a new market.

What is price-skimming?

Setting a high price for a new product for a limited time to boost profits before competitors enter.

What is predatory pricing?

Setting a price very low (even below cost) to eliminate competitors from the market.

What is psychological pricing?

Setting a price that ‘tricks’ the consumer into thinking they are getting a good deal, like pricing at $199 instead of $200.

What is the effect of price elasticity of demand on pricing strategies?

Price elastic demand means consumers are sensitive to price changes, while price inelastic demand means they are not.

Why might a business use dynamic pricing?

To adjust prices based on market conditions, consumer demand, and competitor pricing.

What are some modern pricing trends affected by technology?

Online sales, dynamic pricing, personalized pricing, subscription pricing, and price comparison sites.

What should you consider when recommending a pricing strategy in an exam?

Consider PED (Price Elasticity of Demand), competition, brand strength, and the product life cycle.