Podcast
Questions and Answers
What is the primary purpose of psychological pricing?
What is the primary purpose of psychological pricing?
In what situation is 'Going Rate Pricing' most effective?
In what situation is 'Going Rate Pricing' most effective?
What is the main reason behind using odd prices in psychological pricing?
What is the main reason behind using odd prices in psychological pricing?
Why might a company use 'Going Rate Pricing' strategy?
Why might a company use 'Going Rate Pricing' strategy?
Signup and view all the answers
What pricing strategy involves selling a product at a higher price due to high perceived value?
What pricing strategy involves selling a product at a higher price due to high perceived value?
Signup and view all the answers
In which pricing strategy does a firm charge a low price, often equal to costs, to penetrate a new market and gain market share?
In which pricing strategy does a firm charge a low price, often equal to costs, to penetrate a new market and gain market share?
Signup and view all the answers
What is the short-term high price strategy used to 'milk' the market for a period of popularity?
What is the short-term high price strategy used to 'milk' the market for a period of popularity?
Signup and view all the answers
Which pricing strategy involves reducing prices to remove or deter new entrants in a price-sensitive market?
Which pricing strategy involves reducing prices to remove or deter new entrants in a price-sensitive market?
Signup and view all the answers
What pricing strategy involves pricing a product below cost, therefore selling it at a loss?
What pricing strategy involves pricing a product below cost, therefore selling it at a loss?
Signup and view all the answers
Why might a firm use loss leading as a pricing strategy?
Why might a firm use loss leading as a pricing strategy?
Signup and view all the answers
In which strategy does a firm use a long-term high price due to high perceived value of the product?
In which strategy does a firm use a long-term high price due to high perceived value of the product?
Signup and view all the answers
What pricing strategy involves reducing prices to remove or deter new entrants in a price-sensitive market?
What pricing strategy involves reducing prices to remove or deter new entrants in a price-sensitive market?
Signup and view all the answers
What is the strategy of using barrier pricing first to deter or remove competitors, and then increasing prices after cornering the market?
What is the strategy of using barrier pricing first to deter or remove competitors, and then increasing prices after cornering the market?
Signup and view all the answers
What are the problems associated with loss leading as a pricing strategy?
What are the problems associated with loss leading as a pricing strategy?
Signup and view all the answers
In which pricing strategy does a firm price a product below cost to attract customers for other products?
In which pricing strategy does a firm price a product below cost to attract customers for other products?
Signup and view all the answers
What is the pricing strategy used to penetrate a new market and gain market share by charging a low price, often equal to costs?
What is the pricing strategy used to penetrate a new market and gain market share by charging a low price, often equal to costs?
Signup and view all the answers
Which pricing strategy involves setting a long-term high price due to high perceived value of the product?
Which pricing strategy involves setting a long-term high price due to high perceived value of the product?
Signup and view all the answers
In which pricing strategy does a firm use a short-term high price to 'milk' the market for a period of popularity?
In which pricing strategy does a firm use a short-term high price to 'milk' the market for a period of popularity?
Signup and view all the answers
What is the strategy of using barrier pricing first to deter or remove competitors, and then increasing prices after cornering the market?
What is the strategy of using barrier pricing first to deter or remove competitors, and then increasing prices after cornering the market?
Signup and view all the answers
In which pricing strategy does a firm price a product below cost to attract customers for other products?
In which pricing strategy does a firm price a product below cost to attract customers for other products?
Signup and view all the answers
What pricing strategy involves reducing prices to remove or deter new entrants in a price-sensitive market?
What pricing strategy involves reducing prices to remove or deter new entrants in a price-sensitive market?
Signup and view all the answers
What is the pricing strategy used to penetrate a new market and gain market share by charging a low price, often equal to costs?
What is the pricing strategy used to penetrate a new market and gain market share by charging a low price, often equal to costs?
Signup and view all the answers
What pricing strategy involves selling a product at a higher price due to high perceived value?
What pricing strategy involves selling a product at a higher price due to high perceived value?
Signup and view all the answers
What is the short-term high price strategy used to 'milk' the market for a period of popularity?
What is the short-term high price strategy used to 'milk' the market for a period of popularity?
Signup and view all the answers
In which pricing strategy does a firm charge a low price, often equal to costs, to penetrate a new market and gain market share?
In which pricing strategy does a firm charge a low price, often equal to costs, to penetrate a new market and gain market share?
Signup and view all the answers
What pricing strategy involves pricing a product below cost, therefore selling it at a loss?
What pricing strategy involves pricing a product below cost, therefore selling it at a loss?
Signup and view all the answers
What is the strategy of using barrier pricing first to deter or remove competitors, and then increasing prices after cornering the market?
What is the strategy of using barrier pricing first to deter or remove competitors, and then increasing prices after cornering the market?
Signup and view all the answers
In which pricing strategy does a firm use a long-term high price due to high perceived value of the product?
In which pricing strategy does a firm use a long-term high price due to high perceived value of the product?
Signup and view all the answers
Which pricing strategy involves setting a long-term high price due to high perceived value of the product?
Which pricing strategy involves setting a long-term high price due to high perceived value of the product?
Signup and view all the answers
What is the strategy of using barrier pricing first to deter or remove competitors, and then increasing prices after cornering the market?
What is the strategy of using barrier pricing first to deter or remove competitors, and then increasing prices after cornering the market?
Signup and view all the answers
What pricing strategy involves selling a product at a higher price due to high perceived value?
What pricing strategy involves selling a product at a higher price due to high perceived value?
Signup and view all the answers
What is the pricing strategy used to penetrate a new market and gain market share by charging a low price, often equal to costs?
What is the pricing strategy used to penetrate a new market and gain market share by charging a low price, often equal to costs?
Signup and view all the answers
What pricing strategy involves reducing prices to remove or deter new entrants in a price-sensitive market?
What pricing strategy involves reducing prices to remove or deter new entrants in a price-sensitive market?
Signup and view all the answers
In which pricing strategy does a firm use a short-term high price to 'milk' the market for a period of popularity?
In which pricing strategy does a firm use a short-term high price to 'milk' the market for a period of popularity?
Signup and view all the answers
What is the primary purpose of psychological pricing?
What is the primary purpose of psychological pricing?
Signup and view all the answers
Why might a firm use loss leading as a pricing strategy?
Why might a firm use loss leading as a pricing strategy?
Signup and view all the answers
What is the short-term high price strategy used to 'milk' the market for a period of popularity?
What is the short-term high price strategy used to 'milk' the market for a period of popularity?
Signup and view all the answers
What pricing strategy involves pricing a product below cost, therefore selling it at a loss?
What pricing strategy involves pricing a product below cost, therefore selling it at a loss?
Signup and view all the answers
Why might a company use 'Going Rate Pricing' strategy?
Why might a company use 'Going Rate Pricing' strategy?
Signup and view all the answers
What pricing strategy involves reducing prices to remove or deter new entrants in a price-sensitive market?
What pricing strategy involves reducing prices to remove or deter new entrants in a price-sensitive market?
Signup and view all the answers
Study Notes
Psychological Pricing
- Primary purpose is to enhance perception of value and attract customers by creating the illusion of a lower price.
- Odd pricing strategy utilizes prices that end in .99 or .95 to make products appear cheaper than they are.
Going Rate Pricing
- Most effective in highly competitive markets where products are relatively undifferentiated.
- Companies may adopt this strategy to maintain market stability and avoid price wars.
High Perceived Value Pricing
- Involves selling products at a higher price due to the perceived value in customers' minds, often backed by branding or quality.
Market Penetration Pricing
- Firms charge low prices, often equal to costs, to penetrate new markets and gain market share, hoping to increase prices later once established.
Short-Term High Price Strategy
- Known as price skimming, aimed at 'milking' the market during a product's peak popularity or initial release.
Barrier Pricing
- Strategy where prices are initially set lower to deter new entrants, followed by price increases after achieving market control.
Loss Leading Strategy
- Pricing products below cost to attract customers for other items, effectively driving traffic to stores or services.
- Can sometimes lead to issues with profitability and perceived brand value.
Deter New Entrants Strategy
- Involves reducing prices to discourage new competitors from entering the market, maintaining dominance for established firms.
Problems with Loss Leading
- Risks include potential financial losses and difficulties in sustaining the business model if customers only purchase loss leaders.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Related Documents
Description
Test your understanding of pricing strategies by tackling real-world case studies and applying the 7 pricing strategies. Assess your ability to consider factors influencing pricing and arrive at a strategic price for products.
