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pricing strategies - Coggle Diagram
pricing strategies
psychological pricing
- prices appear to be lower hoping that the customer believes the price is lower than it actually is (99p, £2.99)
- nudges customers to make a purchase
- some customers may not buy so revenue will not increase
- customers may not be attracted to the business
penetration pricing
- setting a low price for a new product
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- when price rises people may not buy the product
price skimming
- selling a product at a high price to earn potential more profits
- attracts early adopters (latest phone, new football boots)
- some customers may be unwilling or unable to buy products at high prices
cost plus pricing
- adding the cost of producing the good and adding on a profit margin
- adds profit to ever good sold
- may not work in a competitive market
competitive pricing
- producer offering prices lower than or same prices as competitors
- ensures that the firm is price competitive
- customers may be used to buying from competitors and may not switch from rivals
price discrimination
- changing prices to different market segments
- customers attracted to lower prices
- customers may choose rival retailers
loss leader
- a product is set at a low price whereas other product that customers may buy with the first product is set at a higher price
- boosts sales of other, more profitable products
- customers may get used to low prices so will only work in the short term