What is demand?
The quantity that customers are WILLING AND ABLE TO BUY at a given price in a given period of time for a good or service
Basic law of supply
As the price of the product rises ,so businesses expand supply to the market
What are the factors that lead to a change in supply
-Changes in the costs of production
-Introduction of new technology
-Indirect taxes
-Government subsidies
-External shocks
What is the changes in costs of production
Costs : raw materials,electricity,labour ,raw materials
If production costs rise ,sellers are likely to reduce supply. Due to reduce profits
What is market equilibrium?
(Marker cleaning) where supply;and demand are equal.
State of balance between market demand and supply - there is no excess demand or supply
What is penetration pricing?
A strategy in which low priced are set to break into a market or to achieve a sudden increase in a market share
E.g. Netflix (low subscription costs +building up a loyal customer base)
What is Price Skimming ?
A pricing strategy by which a firm charges the highest initial price that customers will pay and then lowers it over time.
E.g. Apple products (iPhone will be most expensive when they come out)
What is predator (destroyer ) pricing ?
When a firm sets a very low prices in order to drive other firms out of the market.
E.g. Amazon sells products for a very low cost compared to other competitors
What is cost plus pricing ?
Adding a % (the mark up ) to the costs of producing a product to get the price which eases the justification of a businesses price levels and fluctuation
E.g. Grocery ships -organic ranges
What is psychological pricing?
This is intended to give an impression of value .E.g. £3.99 instead of £4.
Makes customers believe they are paying for a cheaper item
E.g. McDonald’s 99p burgers
What is competitive pricing ?
Pricing strategies based on the prices charged by rivals which helps the business understand their market position and boost profits
E.g. Coca Cola vs Pepsi
Coca Cola offers lower prices than Pepsi
What is Product life cycle ?
The stages through which a product passes from its development to being withdrawn from sale
What is Sales Promotion?
Put products on sales , reduced item , low pricing.
This helps to increase sales, encourage brand loyalty and generate brand awareness.
What is The Boston Matrix ?
A tool of product portfolio analysis that classifies products according to the market share of the product and the rare growth of the market in which the product is sold
