(Drury) Pricing Decisions and Profitability Analysis - Pricing policies
3 important questions on (Drury) Pricing Decisions and Profitability Analysis - Pricing policies
The final price that is selected will depend upon the pricing policy of the company. Name two policies.
1. A price-skimming policy
2. A penetration pricing policy
2. A penetration pricing policy
What is a price-skimming policy?
An approach to pricing that attempts to exploit sections of the market that are relatively insensitive to price changes.
It offers a safeguard against unexpected future increases in costs, or a large fall in demand after the novelty appeal has declined. Once the market becomes saturated, the price can be reduced to attract that part of the market that has not yet been exploited.
Should not be adopted when a number of close substitutes are already being marketed.
It offers a safeguard against unexpected future increases in costs, or a large fall in demand after the novelty appeal has declined. Once the market becomes saturated, the price can be reduced to attract that part of the market that has not yet been exploited.
Should not be adopted when a number of close substitutes are already being marketed.
Name the four stages of a product life cycle
1. Introductory: the product is launched and there is minimal awareness and acceptance of it.
2. Growth: sales begin to expand rapidly at the growth stage because of introductory promotions and greater customer awareness.
3. Maturity: success begins to taper off as potential new customers are exhausted.
4. Decline: sales diminish as the product is gradually replaced with new and better versions.
2. Growth: sales begin to expand rapidly at the growth stage because of introductory promotions and greater customer awareness.
3. Maturity: success begins to taper off as potential new customers are exhausted.
4. Decline: sales diminish as the product is gradually replaced with new and better versions.
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