Question

Rachel recently started a new gift shop in town. When she is deciding how to price the new products in her shop, she measures the value of her products against those of the other shops in her area. Rachel is most likely using a _______ pricing strategy .

Answer 1

Answer:

The correct word for the blank space is: competitive.

Explanation:

Pricing strategies are methods companies use at the moment of setting the prices of their products. The most common pricing strategies are:

• Cost-plus pricing. Involves recognizing the production costs and adding a percentage of those costs which represents the profit of the firm.
• Competitive pricing. Implies establishing the price of a product similar to what competitors in the market have set.
• Value-based pricing. It requires setting the price of goods and services based on what consumers think the price should be.
• Price skimming. Involves pricing a product high at first and changing the price according to market fluctuations.
• Penetration pricing. Implies setting the price of a product low to wipe out competitors and raising it after they completely disappeared.