Business Studies Homework?

Question

What types of pricing stratergies are there - like skimming

Answer 1

For smaller businesses...

Having the lowest price is not a strong position for small business. Larger competitors with deep pockets and the ability to have lower operating costs will destroy any small business trying to compete on price alone. Avoiding the low price strategy starts with looking at the demand in the market by examining three factors:

1. Competitive Analysis: Don't just look at your competitor's pricing. Look at the whole package they offer. Are they serving price-conscious consumers or the affluent group? What are the value-added services if any?

2. Ceiling Price: The ceiling price is the highest price the market will bear. Survey experts and customers to determine pricing limits. The highest price in the market may not be the ceiling price.

3. Price Elasticity: If the demand for your product or service is less elastic, you can then have a higher ceiling on prices. Low elastic demand depends on limited competitors, buyer's perception of quality, and consumers not habituated to looking for the lowest price in your industry.

Once you understand the demand structure in your industry, review your costs and profit goals as set in your business plan or financials. The low price strategy is best avoided by small business but there are conditions such as a price war that can drag a company into the lowest price battle.

Answer 2

psychological pricing- makes price look smaller, e.g. £1.99 instead of £2.00

loss leader pricing- setting prices so low that a profit may not even be made in order to push a smaller competitor out of the market

penetration pricing- a low price is set initially in order to penetrate the market, then once customers are buying the price is raised

Answer 3

walking, thinking, riding a bike. all sorts.

just use youre head.

Answer 4

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