This video examines how economists use game theory to model the behaviour of … to gain the competitor advantage (Tutor2u, 2012). Business Case Studies. Twitter. Education Website. Here is an example of cost-plus pricing, where a business wishes to ensure that it makes an additional £50 of profit on top of the unit cost of production. The business aims to continue to attract customers to purchase its products, despite the intense competition in the market. Jim is a well-known Business writer and presenter as well as being one of the UK's leading educational technology entrepreneurs. It is often said that there are four categories of position a business can find itself in which influence the control it has over pricing: Here, a business has no option but to charge the ruling market price. Shutterfly can create a book celebrating your children, family vacation, holiday, sports team, wedding albums and more. This is also known as product expansion strategy. In effect such businesses are "price-takers" – they must accept the going market price as determined by the forces of demand and supply. setting a price that is in line with the prices charged by direct competitors. Price is essential to a consumer’s purchasing decisions. Inefficient long-term strategy: Price skimming is not a viable long-term pricing strategy, as competitors will eventually enter the market with rival products and exert downward pricing pressure. tutor2u. The aim of psychological pricing is to make the customer believe the product is cheaper than it really is. They may buy from the cheapest provider or perhaps from the one which offers the best customer service. GCSE Business Questions with Mr Bargh. Much cheaper & more effective than TES or the Guardian. The company can use competitive pricing policy to enter in the market with new product. the launch of rival products to the iPhone or iPod). 0 3 A significant downturn in the economy has led a business to review its pricing strategy. AQA GCSE Business Studies (8132) Categorised Past Paper Questions, Mark Schemes, quizes and Revision Notes. Storeroom's. Education Website. ... Pricing Strategies (GCSE) Study notes. Cost-plus (or "mark-up") pricing is widely used in retailing, where the retailer wants to know with some certainty what the gross profit margin of each sale will be. Pricing strategies marketing mix. So, if the wholesale cost of a product is £10 per unit, the retailer will look to sell it for 2.4x £10 = £24. It may also be that the pricing strategies a business can implement are constrained by the competitive position of the business. 214 High Street, So, it would be better mix competitive pricing with some other strategies. The aim ofpenetration pricing is usually to increase market share of a product, providing the opportunity to increase price once this objective has been achieved. This is equal to a total mark-up of £14 (i.e. Some firms may have a target to increa… Product development is the strategy suggested by Ansoff matrix. Boston House, There are three main approaches a business takes to setting price:Cost-based pricing: price is determined by adding a profit element on top of the cost of making the product. A loss leader is a product priced below cost-price in order to attract consumers into a shop or online store. Study notes. All students preparing for mock exams, other assessments and the summer exams for either AQA or Edexcel GCSE Business. That largely depends on the normal competitive practice in a market and also whether the resulting price is acceptable to customers. So, it would be better mix competitive pricing with some other strategies. At tutor2u, we love education. Pricing strategies (gcse) | tutor2u business. Others use tactics that might seem like you’re hiding the true cost of the item. Jim is a well-known Business writer and presenter as well as being one of the UK's leading educational technology entrepreneurs. Pricing Strategies - How to price a product - Duration: 8:03. However there are other important approaches to pricing, and we cover them throughout the entirety of this lesson. In some ways this is quite an old-fashioned and somewhat discredited pricing strategy, although it is still widely used. Once sales have been revealed at each stage get students to work out what profit they made, add these up at the end to reveal a winner. Price is the amount a business charges its customers for its product or service. Can you think of any ways they may improve on their Pricing? In pairs or groups students choose from a selection of pricing strategies at various stages of a fictional product's life cycle. In the UK a standard retail mark-up is 2.4 times the cost the retailer pays to its supplier (normally a wholesaler). Gearing Ratio | Business | tutor2u. In 2012, JCPenney went with a program that they called “fair and square” pricing. 35 pricing examples simplicable. The answer is the perceived price barriers that customers may have. Pricing strategy examples, know, own and master your pricing. Fax: +44 01937 842110, We’re proud to sponsor TABS Cricket Club, Harrogate Town AFC and the Wetherby Junior Cricket League as part of our commitment to invest in the local community, Company Reg no: 04489574 | VAT reg no 816865400, © Copyright 2018 |Privacy & cookies|Terms of use, AQA A Level Business Study Resources for 3.3 - Decision-Making to Improve Marketing Performance, Importance of Price to an Effective Marketing Mix (Worked Answer to AQA Grade Booster 2019: 16 Mark Question), Pricing Products: the iPhoneX "Higher or Lower" Activity, Marketing: Factors to Consider When Setting Prices (GCSE), Marketing: Introduction to Pricing (GCSE), Pricing - factors to consider when setting price, Marketing Mix: Price (Revision Presentation), Coffee, Plastic and Pricing - a Marketing Mix with a Message, Teaching Business with the Chuckle Brothers, Premium Price Pizza - If You Have the Dough, Tesco special offers past their Sell-by Date, Rail fare hike reveals burden shifting to passengers, Tesco ends gender price differences for women's razors, Dynamic Pricing for Restaurants - An Anti-Uber Approach, Glocalisation Illustrated: The Marketing Mix at Disneyland Shanghai, The Factors that Explain Growth in Demand for Premium Pet Food. GCSE Business Studies Finance Revision ... Thompson VSE Recommended for you. How high should the mark-up percentage be? Learn and revise elements of the marketing mix looking at product, price, place and promotion with BBC Bitesize GCSE Business Studies. Article by Steadward. sociology. For example, why are DVD's priced at £12.99 or £14.99? The diagram depicts four key pricing strategies namely premium pricing, penetration pricing, economy pricing, and price skimming which are the four main pricing policies/strategies. Make use of the theory about the different pricing strategies and see if you can relate any of these to T mobile. But, the pricing strategy of competitors may not fit with the company and it causes disharmony in the company. Learn more ›. Pricing strategies. Pricing Strategies (GCSE) | Business | tutor2u Penetration pricing is the pricing technique of setting a relatively low initial entry price, usually lower than the intended established price, to attract new customers. Pricing strategies. 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Once sales have been revealed at each stage get students to work out what profit they made, add these up at the end to reveal a winner. Cart . Our aim is to support learning wherever it takes place - online, in person at our student and teacher CPD courses and via mobile devices. Business & Economy Website. This strategy deals with the expansion of new products for the current market. Reach the audience you really want to apply for your teaching vacancy by posting directly to our website and related social media audiences. About tutor2u is a leading provider of online educational resources for teachers and students. Pricing products: pricing considerations, approaches, and strategy. Why value-based pricing is the best ecommerce pricing strategy. Jim co-founded tutor2u alongside his twin brother Geoff! The price of a product is how much a customer is asked to pay for it. A product is goods or a service that is sold to customers or other businesses. There are three main approaches a business takes to setting price: Cost-based pricing: price is determined by adding a profit element on top of the cost of making the product. Customers will soon get used to the tactic, so it makes sense to change the loss leader or its merchandising every so often. The course is specifically designed to support AQA & Edexcel students, but is also suitable for OCR, eduqas and WJEC students. Levels: AS, A Level, IB, ... Jim co-founded tutor2u alongside his twin brother Geoff! But customers will certainly be mindful of what is a reasonable or normal price in the market. Pricing strategies for … If the price discount is sufficiently deep, then it makes sense for customers to buy as much as they can (assuming the product is not perishable). Two Teachers. Study notes. West Yorkshire, So a price that is one pence lower can make the difference between closing the sale, or not! A Increase selling prices 5 The purpose of making a product a loss leader is to encourage customers to make further purchases of profitable goods while they are in the shop. As we’ve just identified, project management and strategic, actionable decisions go into setting the price of a product. 5.3.2 The Marketing Mix (Price) - Syllabus aim is to identify the different pricing methods and to highlight the importance of price elasticity of demand when recommending an appropriate pricing strategy. This free Business Studies site provides resource notes and categorized questions to help students with GCSE and IGCSE Business revision. But does this strategy work? General strategies 1. Penetration Pricing. Here are ten different pricing strategies that you should consider as a small business owner.