It is common for firms to set a price such as $19.95 or $19.99 for a $20 product
ID: 422308 • Letter: I
Question
It is common for firms to set a price such as $19.95 or $19.99 for a $20 product. This is done under the assumption that the price is viewed as being “slightly over $10” instead of “slightly under $20” by the customer who will therefore, find the price more attractive. This practice of pricing is referred to as
skimming pricing.
penetration pricing.
target pricing.
odd-even pricing.
standard markup pricing.
3.
As a part of a special promotion, a retailer may decide to temporarily lower the price of one of its products in order to attract more customers. This is done under the assumption that the customers, attracted by the lower price, will purchase other products that have a high markup. This pricing practice is known as
target return-on-sales pricing.
loss-leader pricing.
bundle pricing.
skimming pricing.
target profit pricing.
Explanation / Answer
The practice of pricing done under the assumption that some price points like setting the price in odd numbers or decimal points attracts the buyer by giving the perception of lesser price is referred to as - Odd-even pricing.
When the retailer opts for pricing some of the products below the actual price and expects that the loss will be recovered from the sale of the additional products the customer buys which are profitable , this pricing practice is known as Loss-leader pricing.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.