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Pricing strategy - Coggle Diagram
Pricing strategy
Cost plus
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If you go onto a pizza delivery site you will see that the price of the pizza usually increases if you add more toppings
Skimming
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The price is set high to start, this will create high profits and may be used to pay back high R&D costs
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Competitive
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This means that customers will have to judge a product or service on “non-price” methods such as; quality of service or speed
Strategy usually used where products in a market are all very similar (homogenous) so there are lots of substitutes and have elastic demand
Penetration
This means setting prices really low on a new product to encourage sales and to persuade customers to try the product. Then when they like the product and have to keep buying it the business raises the price
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Mass market – repeat purchases e.g. tea bags, biscuits which are called Fast Moving Consumer Goods (FMCG).
Predatory
In oligopolies or monopolies existing businesses may hold off the threat of a new entrant by lowering their prices so that any competitor cannot make a profit.
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Depends on the strength of the brand, will consumers switch or stay loyal?
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