Question

a)Discuss the three major pricing strategies used by marketers.

b) Using examples, how are marketers using competitive pricing, as a pricing strategy, in the fast-food industry?

Answer 1

Answers.

A.

1. Cost-plus pricing—simply calculating your costs and adding a mark-up.
2. Competitive pricing—setting a price based on what the competition charges.
3. Value-based pricing—setting a price based on how much the customer believes what you’re selling is worth.

Answer B

  The fast food industry is highly competitive and dominated by large companies. Smaller businesses must be experts in developing marketing strategies that drive consumer traffic. This method is simple because competitors’ prices are most often publically displayed and it is therefore easy to copy them. When products are identical or highly similar , it is often simple to copy competitors’ prices rather than implement another pricing strategy. With this method, the firm allows its competitors to incur the costs of establishing an optimum price.