Cost-Plus Pricing
What is the main feature of cost-plus pricing?
Adding a markup to production costs
What is the key feature of penetration pricing?
Very low initial prices
Define loss leader pricing
Selling a product at a loss
What is the main feature of premium pricing?
High prices based on perceived value
What is an advantage of cost-plus pricing?
Simple to use and provides financial stability
When is penetration pricing most effective?
Entering crowded or highly competitive markets
Where is loss leader pricing commonly used?
Examples: Supermarkets or gaming consoles (XBox)
Which market does premium pricing target?
Luxury or status-seeking consumers
What is a major limitation of cost-plus pricing?
Ignores competitor prices and demand
What is a major risk of penetration pricing?
Difficult to raise prices later
What ethical or brand risk is linked to loss leader pricing?
Can harm fair competition or brand image
What risk does premium pricing face if quality drops?
Customers will not justify high prices