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Question
What is Cost plus pricing policy?
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Solution
The basic idea underlying this approach is that the selling price of a product must cover its full cost and yield a reasonable margin of profit. The margin may be a fixed amount per unit or a percentage of cost. The margin is known as 'mark up' and, therefore, cost plus pricing is also known as 'mark up pricing'. The actual formula used for cost plus pricing may vary widely between industries and even between firms within an industry.
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RELATED QUESTIONS
It is also known as 'going rate pricing' or competition based pricing.
Introducing a product at low price and increasing the price once the brand succeeds is known as ______ pricing.
______ price refers to the high initial price charged when a new product is introduced in the market.
______ is the most common method used for pricing.
______ determines the sales volume and the profit margins.
Which pricing strategy will be used to launch a high end auto motors?
Give one difference between skimming pricing and penetrating pricing.
State two disadvantages of Cost plus pricing policy.
| Evergreen Cosmetics is planning to launch a new range of 'anti-wrinkle creams' in the Indian market. They conducted a market survey and found potential competition from Remain Young. Since they are targeting the higher strata of society, the cream is being priced much higher than their competitors. They plan to use the television as a media to advertise this anti-wrinkle cream as opposed to print media which is largely used by them for their other products. Officials at Evergreen Cosmetics feel that with the correct style of promotion, they could easily be successful in the market. |
- Identify and explain the pricing strategy that is being used by Evergreen Cosmetics.
- Describe any two qualities that a salesman selling this product should possess.
- Explain any two tools of sales promotion that can be used here.
Discuss the pros of Penetrating Pricing Policy.
