Summary

Summary - 3.4.3 Pricing Decisions

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The document on "Pricing Decisions" outlines various strategies businesses use to set product prices throughout its life cycle, from research and development to decline. It covers penetration pricing, where low initial prices aim to gain market share; price skimming, where high initial prices capit...

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Uploaded on July 5, 2024
Number of pages 1
Written in 2023/2024
Type Summary

Pricing Decisions
Life Cycle of the product

Research and Development, Introduction, Growth, Maturity, Decline

Penetration Pricing

- Setting a low initial price for a new product in order to get a foot in the market and gain a
market share
- This might happen when a firm releases a new product – aim to entice people
- Likely to be used with a price elastic product

Price Skimming

- Setting a high initial price for a new product in order to justify costs
- Customers may want the product as soon as it comes out so they are prepared to pay high
prices to get it
- Once this market has been ‘skimmed off’ the company will lower price

Dynamic Pricing

- Changing the pricing of goods and services as per the customer and market conditions
- Prices change frequently and quickly in response to changes in demand
- Can use technology to track demand and levels of interest

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