Pricing

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  • Created by: Howzat
  • Created on: 14-05-18 15:52

Penetration Pricing

New Product Only. 

Penny- Penetration pricing. 

Penny= Lower price than competitors 

Low initial costs to get a foothold in the market to achieve market share. 

Grab consumers attension. 

One product has repeat orders raise price to compete with competitors 

If repeat orders not achieved its a flop in the market. 

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Price skimming

New Tech product 

High initial price- recoup cost 

First mover advantage- New ideas/advancements get the sales

Brand loyalty e.g Apple

Promotions

One the product has "skimmed off" lower the price (new advancements are out). 

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Dynamic Pricing/Price discrimination

Prices change frequently in response to demand 

At times of peak demand will go up

Made possible by technology

Set capacity like airlines

Same service but different price. 

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Psychological Pricing

Used to play on customer perceptions. 

£9.99 rather than £10 

Makes the price look better even through there is 1p difference. 

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Predatory/Destroyer

Deliberate price cutting or offering of free gifts to force competition (often smaller businesses) out of the market. 

It is anti-competitive and illegal if it can be proved. 

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Cost Plus (Mark up pricing)

Used by sole traders. 

Adding a certain amount (mark up) to the cost of a product- usually a percentage- to determine a price. 

This will make sure the business will make money from the product/service. 

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Loss Leader

Goods are deliberately sold below cost to encourage customers to buy other products e.g printers + cartridges used a lot by supermarkets. 

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