Questions on marketing mix price

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1. What is meant by price skimming?
This is where the price starts at a high price and then reduces. Businesses use this when there is a high demand for new products. Popular in the technology industry.
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2. What is meant by price penetration?
This is where a company starts at a low price to get market share and then start to increase the price once they already have a market share (SKY did this)
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3. What is a downside of cost plus pricing?
This is where a business works out how much it costs to make the product and then adds some for profit (which is a good thing), however it doesn't consider what the competitors are charging or what the customers are willing to pay
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4. What is meant by loss leaders?
This is where a business makes a loss on a small number of products, but makes a profit on other products which customers purchase when they visit the business. Supermarkets use this strategy
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5. What is an advantage of using penetration pricing?
You gain a large market share reducing the market share of competitors and sometimes putting competitors out of business
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6. State 3 factors which influence the pricing decision...
1. Stage of product lifecycle 2. Type of product 3. What the competitors are doing
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Card 2

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2. What is meant by price penetration?

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This is where a company starts at a low price to get market share and then start to increase the price once they already have a market share (SKY did this)

Card 3

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3. What is a downside of cost plus pricing?

Back

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Card 4

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4. What is meant by loss leaders?

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Preview of the front of card 4

Card 5

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5. What is an advantage of using penetration pricing?

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