| 3 things to consider when deciding a selling price | Income levels of target customers
Prices of competitor’s products
The cost of production |
| 4 main pricing strategies | Competitive pricing
Psychological pricing
Price skimming
Price penetration |
| What is competitive pricing and what are the advantages and disadvantages? | Price decided by the price of competing products. Advantages are, you can quickly understand how much a customer is willing to pay and you don't have to compete with other businesses on price. Disadvantages are you may not be able to cover production costs if your price is low. |
| What is psychological pricing and what are the advantages and disadvantages of it? | Gives customers the impression the product is cheaper than it is by avoiding round numbers for their prices. Advantages are it attracts customers to your product over competitors, influence over a potential customer’s opinion of the expense of the product. Disadvantage is that you have o be careful not to overuse this method as it could become ineffective. |
| What is price skimming and what are its advantages and disadvantages? | Charging a high price initially and lowering it over time. Advantages are it secures sales for a long period of time and you earn high levels of revenue initially. Disadvantages are risk of putting off customers with an initial high price and you have to ensure the price isnt lowered too late as competitors will realise similar products at lower prices. |
| What is price penetration and what are its advantages and disadvantages? | When a product has a low price initially that is increased overtime. Advantages are it encourages potential customers to trial the i product and it is more likely to get a customer to change their buying habits. Disadvantages are loss of revenue from initial low price and risk putting customers off buying your product when the price increases. |
| List 6 advertising methods | Leaflets
Social media
Magazines
Newspaper adverts
Radio adverts
Websites |
| What do you have to consider when deciding how to advertise your product? | Your audience, your budget and the reach of people the advertising will get to. |
| What 3 advertising methods can be targeted to an audience? | Social Media
Magazines
Radio |
| What 4 advertising methods can be used for businesses with a low budget? | Leaflets
Social media
Websites
Newspapers |
| What advertising methods reach a high amount of people? | Leaflets
Social media
Newspapers
Magazines
Radio |
| List 6 sales promotion techniques | Discounts
Competitions
Buy one get one free
Point of sale advertising
Free gifts/ product trials
Loyalty schemes |
| What does good customer service lead to and how can you provide it? | Good customer service leads to a god business reputation. To provide good customer service you need: good customer knowledge, customer engagement and after sales service. |
