Created by Rory Coverdale
over 7 years ago
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Question | Answer |
Price points | All products are sold at certain predetermined prices. |
Advantage of Price points | It is simple for customers to choose, and is easy for businesses to set prices and to suggest that customers consider a higher priced model. (However, the profit margin on each product varies) |
Price skimming | A business starts out with a high price in the introduction stage so that those who want a product will buy it, then they lower it to attract more customers. |
Advantage of price skimming | It will lead to higher profits for the business |
Price penetration | A business starts out with the lowest possible price in the establishment stage to attract customers, then raises its price once established. |
Advantage of price penetration | The business will get more revenue as the customers hopefully will have enjoyed it enough to pay more. |
Loss leader | A product is sold below its cost price in order to attract people to to the business so that they will buy other more profitable products. |
Advantage of Loss leader | It helps to clear out surplus stock or stock which is close to its use-by date. |
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