Http:// Copyright 2007 – Biz/ed Pricing Policies, Quality and Adding Value BTEC Business.

http://www.bized.co.uk

Pricing Policies, Quality and Adding Value

BTEC Business

Business Use of Demand Curves

Firms can find analysis of their products’ demand curves useful as it helps them:

• Work out how changing their prices will affect their revenue

• Assess how consumers will react to changes in price

Price and Demand

• In general, the higher the price charged for a good or service, the lower the quantity that will be demanded of that product

• This relationship is not necessarily simple

• Let’s look at an example

Demand AnalysisPrice Quantity

DemandedTotal Revenue

50 1000 50000

100 800 80000

150 400 60000

200 300 60000

Demand Analysis

• At £100 per unit, the firm earns £80000 revenue

• If price rises to £150 per unit, revenue falls to £60000

• This helps the firm find its revenue maximising price

Price Quantity Demanded

Total Revenue

50 1000 50000

100 800 80000

150 400 60000

200 300 60000

Demand Analysis

• At any price below £100 per unit, the firm earns more by raising its price

• At prices over £100 per unit, the firm’s revenue falls

• The revenue maximising price is at around £100 per unit

Price Quantity Demanded

Total Revenue

50 1000 50000

100 800 80000

150 400 60000

200 300 60000

Pricing Policies

If a firm has the power in its market to set its own price, it can adopt a pricing policy:

• Market penetration pricing• Destroyer pricing• Follow-the-leader pricing• Skimming

Pricing Policies

Find out more about these policies in your research time.

‘Premium’ pricing means charging higher prices to certain segments of their market.

Adding Value

This is where raw materials or component parts are processed to boost their value when they are sold on.

AdvertisingFirms’ pricing policies can be made to work better through the use of advertising. Advertising is included under ‘Promotion’ as part of the Marketing Mix. Its aim is either

• to inform consumers or

• to persuade them to buy a particular product or range of products.

Advertising

• In oligopoly markets, advertising is often used to differentiate one firm’s products from those of its competitors

• Firms adopting a market skimming policy use advertising to persuade consumers to demand their premium product

Http:// Copyright 2007 – Biz/ed Pricing Policies, Quality and Adding Value BTEC Business.

Documents

Transcript of Http:// Copyright 2007 – Biz/ed Pricing Policies, Quality and Adding Value BTEC Business.

Http:// Copyright 2006 – Biz/ed Indicators of Economic Development.

Http:// Copyright 2007 – Biz/ed Macroeconomic Policies.

Http:// Copyright 2007 – Biz/ed Unemployment, NAIRU and the Phillips Curve.

Http:// Copyright 2007 – Biz/ed Measures of Economic Performance.

Http:// Copyright 2006 – Biz/ed Inequality.

Http:// Copyright 2007 – Biz/ed Public Sector Spending.

Http:// Copyright 2006 – Biz/ed The Labour Market The Supply and Demand for Labour.

Http:// Copyright 2006 – Biz/ed The Retail Travel Environment BTEC National Travel and Tourism.

Http:// Copyright 2006 – Biz/ed Market Structure.

Http:// Copyright 2007 – Biz/ed Production Methods & Kaizen.

Http:// Copyright 2005 – Biz/ed Aggregate Demand and Supply.

Http:// Copyright 2007 – Biz/ed Global Factors Influencing Business Strategy.

FTP IMAP TCP SMTP IP HTTP UPD HTTPSwiki.computing.hct.ac.uk/_media/computing/btec/level3/... · 2015-03-02 · HTTP Hypertext transfer protocol. It is a protocol defined in the application

Http:// Copyright 2006 – Biz/ed Pricing Strategies.

Http:// Copyright 2006 – Biz/ed Market Structure How Businesses Compete.

with-Biz SAGA 5 18 Nakashima Emi httP:// ... · with-Biz SAGA 5 18 Nakashima Emi httP:// Saga Prefectural Regional Industry Support Center Saga Prefectural Regional Industry Support

Http:// Copyright 2007 – Biz/ed Investment Appraisal.

Http:// Copyright 2004 – Biz/ed Pricing Strategies.

Http:// Copyright 2005 – Biz/ed Product Life Cycles and the Boston Matrix.

Http:// Copyright 2005 – Biz/ed Human Resource Management.