Theory question 102
Pricing(a) What is pricing? (b)Explain the following pricing strategies in marketing: (i) penetration pricing (ii) price skimming (iii) geographical pricing (iv) price haggling (c) State five factors to be considered by a company in fixing prices for its products.
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(a) Pricing is deciding the amount of money a firm will charge for its product.
(b)(i) Penetration pricing: setting a low price at launch to win a large market share quickly.
(ii) Price skimming: setting a high price at launch, then lowering it over time.
(iii) Geographical pricing: charging different prices in different locations, e.g. to cover transport costs.
(iv) Price haggling: buyer and seller bargain until they agree a price.
(c) Any five: cost of production; demand and customers' ability to pay; competitors' prices; pricing objectives; government regulations/taxes; nature of the product; stage of the product life cycle; cost of distribution and promotion; the firm's image.
Give each point as a full sentence, with an example where possible.