Pricing strategies (HL only)
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All 9 Flashcards — Pricing strategies (HL only)
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Question
What is dynamic pricing?
Answer
Prices change in real time based on demand, time, customer profile or supply. Used by airlines, Uber, hotels.
💡 Hint
Real-time price changes
Question
Dynamic pricing advantage + disadvantage?
Answer
Maximises revenue when demand high, fills capacity when low. BUT can damage trust if seen as unfair.
💡 Hint
Max revenue BUT trust risk
Question
Three HL pricing strategies?
Answer
Dynamic, competitive, contribution — each with different trade-offs.
💡 Hint
Dynamic, competitive, contribution
Question
Compare HL pricing with SL pricing: cost-plus, penetration, ___
Answer
Skimming, premium, loss leader — SL strategies focus more on market positioning.
💡 Hint
Skimming, premium, loss leader
Question
Competitive pricing advantage + disadvantage?
Answer
Easy to implement, avoids price wars. BUT ignores costs — could sell at a loss.
💡 Hint
Easy BUT ignores costs
Question
What is competitive pricing?
Answer
Setting prices based on what competitors charge, not costs. Used in highly competitive markets with similar products.
💡 Hint
Based on competitor prices
Question
Contribution pricing advantage + disadvantage?
Answer
Each unit contributes to fixed costs, useful for special orders. BUT doesn't guarantee profit.
💡 Hint
Contributes to FC BUT no profit guarantee
Question
What is contribution pricing?
Answer
Setting price above variable cost per unit so each unit contributes to fixed costs. Price must exceed VC.
💡 Hint
Price > VC per unit
Question
Airline ticket example of dynamic pricing?
Answer
Same seat: $200 in January, $800 in July — algorithm adjusts based on demand, booking time, remaining seats.
💡 Hint
$200 vs $800 same seat
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Full study notes for Pricing strategies (HL only)
Topic 4.5 hub
The seven Ps of the marketing mix
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