GCSE BUSINESS EDEXCEL-Price

studied byStudied by 1 person
0.0(0)
Get a hint
Hint

what is pricing?

1 / 26

27 Terms

1

what is pricing?

deciding the amount that is required as a payment or service

New cards
2

what are different pricing strategies?

loss leader, skimming, penetration, cost-plus, competitive

New cards
3

what is skimming?

when a product is priced high to begin with and is lowered once it has made lots of sales (apple phones, appliances etc)

New cards
4

what are the advantages of skimming?

very profitable, helps to cover the costs used on the r&d process

New cards
5

what are the disadvantages of skimming?

high prices may put customers off, customers may delay purchase until product is cheaper

New cards
6

what is cost-plus?

when a company works out the total cost to make the product and then the profit is added on top (food industry)

New cards
7

how can a business use cost-plus?

by adding a profit margin in £, by adding a % margin on top of the costs of making the product

New cards
8

what are the advantages of cost-plus?

helps the business to cover all costs, helps the business calculate their breakeven

New cards
9

what are the disadvantages of cost-plus?

difficult to be accurate with all costs, may have been able to charge a higher price than what they sold it for

New cards
10

what is penetration?

setting prices very low to begin with, then raising them once the product has made lots of sales (tv subscriptions, internet providers)

New cards
11

what are the advantages of penetration?

word of mouth recommendations spread quickly, business can establish a product quickly

New cards
12

what are the disadvantages of penetration?

low customer loyalty, price wars

New cards
13

what is competitive?

companies placed close together that are selling the same product in the market (petrol stations, fast foods chains)-customers will have to choose based on what is INSIDE the shop, as the price range will be very similar

New cards
14

what are the advantages of competitive?

prevents price wars, business knows costs are being covered

New cards
15

what are the disadvantages of competitive?

higher price may have been possible, causes shrinkflation

New cards
16

what is loss leader?

when a business sells a product/service at a price that is not profitable-allows the business to attract new customers to the shop (amazon, supermarkets)

New cards
17

what are the advantages of loss leader?

increase in sales, attracts new customers to the shop

New cards
18

what are the disadvantages of loss leader?

reduced profit margins, perception of poor quality due to low price

New cards
19

how does technology influence price?

production processes have become more efficient, more products can be produced in less time

New cards
20

what are the advantages of a business charging high prices?

can generate more gross profit, can allows a business to use good quality materials

New cards
21

what are the disadvantages of a business charging high prices?

customers may switch to cheaper rival products, reduces the competitive advantage for a business

New cards
22

how can competition influence price?

many business bring out the same products as each other with similar prices-they will have to differentiate on non-price factors (petrol stations having shops attached-the customer chooses the shop not the petrol station)

New cards
23

how do you work out the percentage reduction of a product?

new price-original price x 100

New cards
24

how can the introduction stage influence price?

business may start with a low price to encourage sales

New cards
25

how can the growth stage influence price?

business may offer small discounts/promotions

New cards
26

how can the maturity stage influence price?

business will keep prices high to gain more profit

New cards
27

how can the decline stage influence price?

business will heavily discount the product to get as much profit out of it as possible

New cards

Explore top notes

note Note
studied byStudied by 20 people
... ago
4.0(1)
note Note
studied byStudied by 92 people
... ago
5.0(1)
note Note
studied byStudied by 34 people
... ago
5.0(1)
note Note
studied byStudied by 197 people
... ago
5.0(2)
note Note
studied byStudied by 20 people
... ago
5.0(1)
note Note
studied byStudied by 76 people
... ago
5.0(2)
note Note
studied byStudied by 12 people
... ago
5.0(1)
note Note
studied byStudied by 62 people
... ago
5.0(1)

Explore top flashcards

flashcards Flashcard (66)
studied byStudied by 6 people
... ago
5.0(1)
flashcards Flashcard (48)
studied byStudied by 31 people
... ago
5.0(1)
flashcards Flashcard (83)
studied byStudied by 57 people
... ago
5.0(2)
flashcards Flashcard (35)
studied byStudied by 46 people
... ago
5.0(2)
flashcards Flashcard (254)
studied byStudied by 13 people
... ago
5.0(1)
flashcards Flashcard (27)
studied byStudied by 10 people
... ago
5.0(1)
flashcards Flashcard (66)
studied byStudied by 3 people
... ago
5.0(1)
flashcards Flashcard (89)
studied byStudied by 2 people
... ago
5.0(2)
robot