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Pricing Strategy and Consumer Behavior

Questions

1.Which pricing strategies should not be pursued by companies? Why? Give a contemporary real life example of each of these pricing strategies.

2.What is meant by "reservation prices"? Which complex relationships need to be considered when pricing is viewed from this perspective?

3.What is a penetration price policy? What is a skimming price policy? Give a contemporary real life example of both policies.

4.Give the four types of consumer costs and explain.

5.What is the most common objective of pricing? Why?

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1. Which pricing strategies should not be pursued by companies? Why? Give a contemporary real life example of each of these pricing strategies.

Some of the pricing strategies should not be pursued by companies because they are considered illegal or because they are perceived as unfair by customers. They can also seriously affect the long-term performance of a firm. These strategies are:

1. Price fixing: Conspiring with competitors to fix prices (e.g. cartel).
2. Deceptive pricing: These are the pricing practices that mislead consumers (e.g. marketing items with a fictitious price, crossing this price out and then putting on the normal price as though it were a bargain).
3. Predatory pricing: Setting prices low to drive ...

Solution Summary

Pricing Strategy and Consumer Behaviors are noted.

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