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BTEC BUSINESS LEVEL UNIT 29 UNDERSTANDING RETAILING P4
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BTEC BUSINESS LEVEL UNIT 29 UNDERSTANDING RETAILING P4
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Price skimming – is wheoEconomy pricing – Is used wheo retai ers retai ers charge a high Penetration Pricing is used by
ofer products aod services at a ow, oo fri s because they have a retai ers wheo they charge sigoifcaot y
price. A e emeots of the busioess are kept sigoifcaot compettve ower prices that the compettoo io
to a mioimum ioc udiog marketog. advaotage is oot order to gaio market share. Ooce they
Supermarket such as Tesco have a va ue sustaioab e aod teods to have achieved their objectve, they
braod for products such as bread, washiog atract oew eotraots ioto iocrease their prices agaio. Ao examp e
powder aod soap the market. Ioevitab y, the of this is Sky TV
prices fa because of
iocreased supp y to the
market. Most premium This is Tesco’s positoo oo the market aod
Premium pricing – used wheo retai ers ofer products aod service at a high techoo ogy are priced how the coosumers of their products
price. The strategy is used wheo the product or service is uoique or wheo a usiog this strategy. perceive them. It’s ofeo judged io
sigoifcaot compettve advaotage exists. Examp es ioc ude uxury comparisoo to the positoo of their
accommodatoo such as the Savoy or executve fights oo aerop aoes. compettors aod who is beiog successfu
Pricing Market
position Compaoies uses porters framework
Briogiog oew products aod to ideotfy where their positoo is oo
service to the market is the market. It is brokeo dowo io
importaot to aoy compaoy io New products sectoo
order to compettve aod stop and service
TESCO Competitors
customers from getog bored
of the same products aod
goiog to the compaoies riva s. Barriers to New Entrants – oew stores eoteriog the
For examp e, if Tesco doo’t entry Product market that wi target the same
focus oo briogiog out oew Development customers as Tesco wi take some of
Suppliers – Tesco supp ier a so give
products aod/or makiog them their oya customers as they waot to see
Obstac es desigoed to stop oew busioess eoteriog them compettor as a though they
excitog theo customers wi if they cao ofer beter products at beter
the market. Existog busioess re ies oo it market aod have a mutua agreemeot they both
move to other supermarkets va ue, e.g. A di is the oewest supermarket
foaocia power. Tesco cao make maoy barriers to waot the best dea for them,
such as ALDI which ofers
eotry for compaoies that riva cao make the se the supp ier waot to make as much
cheaper prices for simi ar
same products. For examp e, a coroer shop wou d mooey they cao aod Tesco waot to
products
oot be ab e to compete with Tesco because are a save as much as they cao
wor dwide busioess aod they cao aford to raise the Substitutes – compettors that ofer the
barrier eotry. same producers as Tesco are their
compettors. If they ofer the same product
Compaoies are coostaot y tryiog to improve their
at beter va ue thao this wi steer
products aod beiog out of the oewest raoge aod
customers away from Tesco aod more
highest qua ity product to keep their customers happy
towards A di aod Lid
aod stoppiog them from goiog to other shop. This is
importaot for retai ers because they waot to atract
their customers with the atest fashioo items. Io some
case they are ike y to co aborate with ce ebrites or
famous desigoers.
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