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IGCSE Marketing Mix Pricing Methods
Aug 28, 2024
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IGCSE Business Studies: Marketing Mix - Pricing Methods
Overview of Pricing Methods
Cost Plus Pricing
Competitive Pricing
Penetration Pricing
Price Skimming
Promotional Pricing
1. Cost Plus Pricing
Definition:
Based on production costs plus a profit markup.
Advantages:
Convenient and easy to use.
Disadvantages:
May lose sales if selling price is significantly higher than competitors' prices.
2. Competitive Pricing
Definition:
Price set similarly to or just below competitors' prices.
Advantages:
Likely to result in high sales due to competitive pricing.
Disadvantages:
Time-consuming and potentially expensive market research needed to monitor competitors' prices.
3. Penetration Pricing
Definition:
Low introductory price for a new product to attract customers from competitors.
Advantages:
Effective for launching new products in new markets.
Ensures product entry into the market.
Disadvantages:
Low price may lead consumers to perceive the product as cheap or low quality.
4. Price Skimming
Definition:
High initial price for a new product that decreases over time.
Example: Apple phones at launch.
Advantages:
Creates perception of high quality due to high pricing.
Disadvantages:
May deter consumers who view the product as overpriced.
5. Promotional Pricing
Definition:
Low price for a limited time to clear old stock.
Advantages:
Reduces inventory costs and promotes efficiency in business.
Disadvantages:
Low sales revenue due to reduced prices affecting profit margins.
Conclusion
Summarized key pricing methods and their implications for business strategy.
For additional resources, check out IGCSE Computer Science videos (Code 0478) on the Code 4 Programming channel.
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