Slides · PPTX · 332 KB · 20 slides
Price.pptx
Built from the lesson script on 28 September 2026.
EDEXCEL GCSE BUSINESS · PAPER 2
Price
Making marketing decisions
Lesson 2 of 5
openrevise.com
EDEXCEL GCSE BUSINESS · PAPER 2
Last Lesson
Making marketing decisions
Lesson 2 of 5
Answer from memory before the answers appear.
1
Name the three parts of the design mix.
2
Name the five stages of the product life cycle.
3
Give one extension strategy.
4
What is product differentiation?
openrevise.com
EDEXCEL GCSE BUSINESS · PAPER 2
Last Lesson - Answers
Making marketing decisions
Lesson 2 of 5
1
Name the three parts of the design mix.
Function, aesthetics and cost.
2
Name the five stages of the product life cycle.
Development, introduction, growth, maturity and decline.
3
Give one extension strategy.
New features, new markets, repackaging, advertising or price cuts.
4
What is product differentiation?
Making a product different from competitors' products.
openrevise.com
EDEXCEL GCSE BUSINESS · PAPER 2
Learning Objectives
Making marketing decisions
Lesson 2 of 5
1
Explain the pricing strategies: penetration, skimming, cost-plus, competitive and promotional.
2
Calculate a price using cost-plus pricing.
3
Explain the factors that influence pricing: technology, competition, market segments and the product life cycle.
openrevise.com
EDEXCEL GCSE BUSINESS · PAPER 2
PART ONE
Pricing Strategies
Five ways to set a price.
openrevise.com
EDEXCEL GCSE BUSINESS · PAPER 2
Penetration Pricing
Making marketing decisions
Lesson 2 of 5
Setting a low price when a product is launched, to attract customers and gain market share quickly.
How it works
A low price persuades customers to try the product and switch from rivals. Once the product is established, the price rises.
Advantages
Quickly builds sales and market share; discourages competitors from entering.
Disadvantages
Low profit at first; customers may leave when the price rises.
Used for
New products entering competitive markets, such as streaming services and new snacks.
openrevise.com
EDEXCEL GCSE BUSINESS · PAPER 2
Price Skimming
Making marketing decisions
Lesson 2 of 5
Setting a high price when a product is launched, then lowering it over time.
How it works
Early adopters who want the product first will pay a high price. As demand from them falls, the price is cut to attract more customers.
Advantages
High profit on each early sale, helping recover development costs; creates a premium image.
Disadvantages
Low sales at first; high profits attract competitors.
Used for
New technology with a strong brand or a unique feature, such as new phones and games consoles.
openrevise.com
EDEXCEL GCSE BUSINESS · PAPER 2
Cost-plus Pricing
Making marketing decisions
Lesson 2 of 5
Adding a percentage mark-up to the cost of making the product.
How it works
Price = cost per unit + a percentage of that cost as profit.
Advantages
Simple, and ensures every sale covers its costs.
Disadvantages
Ignores what competitors charge and what customers will pay.
Used for
Businesses such as builders and manufacturers who need every job to cover its costs.
openrevise.com
EDEXCEL GCSE BUSINESS · PAPER 2
Calculating a Cost-plus Price
Making marketing decisions
Lesson 2 of 5
Find the mark-up, then add it to the cost.
A candle costs £8 to make. The business adds a 50% mark-up. Calculate the selling price.
1
Find the mark-up
50% of £8 = £8 × 0.5 = £4
2
Add it to the cost
£8 + £4 = £12
ANSWER
Selling price = £12
openrevise.com
EDEXCEL GCSE BUSINESS · PAPER 2
Competitive Pricing
Making marketing decisions
Lesson 2 of 5
Setting a price similar to competitors' prices.
How it works
The business looks at what rivals charge and sets a similar price, or just below.
Advantages
Avoids losing customers to cheaper rivals.
Disadvantages
Profit depends on costs being as low as competitors'; can lead to a price war.
Used for
Products that are very similar to rivals', such as petrol, bread and basic groceries.
openrevise.com
EDEXCEL GCSE BUSINESS · PAPER 2
Promotional Pricing
Making marketing decisions
Lesson 2 of 5
Temporarily reducing prices to boost sales.
How it works
Discounts, sales, "buy one get one free" and special offers for a limited time.
Advantages
Quickly boosts sales, clears old stock and attracts new customers.
Disadvantages
Lower profit per item; customers may wait for the next offer rather than pay full price.
Used for
Seasonal stock, new products and slow-selling lines.
openrevise.com
EDEXCEL GCSE BUSINESS · PAPER 2
Price as a Promotion
Making marketing decisions
Lesson 2 of 5
Promotional pricing: a temporary price cut to boost sales and clear stock.
A sale is promotional pricing at its simplest: a temporary cut in price to bring customers in. It works - but a business that runs sales too often trains its customers never to pay full price.
openrevise.com
EDEXCEL GCSE BUSINESS · PAPER 2
PART TWO
What Influences Pricing?
The factors behind the choice.
openrevise.com
EDEXCEL GCSE BUSINESS · PAPER 2
Influences on Pricing Strategies
Making marketing decisions
Lesson 2 of 5
Technology
Price comparison websites make customers more price-sensitive; new technology can cut costs, allowing lower prices.
Competition
In a competitive market prices must stay close to rivals'; with few competitors, prices can be higher.
Market segments
Different segments will pay different prices - students want low prices; luxury buyers accept high ones.
Product life cycle
Launch may use penetration or skimming; maturity uses competitive pricing; decline may use promotional pricing.
openrevise.com
EDEXCEL GCSE BUSINESS · PAPER 2
Which Strategy When?
Making marketing decisions
Lesson 2 of 5
Situation
Likely strategy
A new snack entering a crowded market
Penetration
A new, unique games console
Skimming
A builder quoting for a new kitchen
Cost-plus
A petrol station with rivals on the same road
Competitive
A shop clearing summer stock in September
Promotional
openrevise.com
EDEXCEL GCSE BUSINESS · PAPER 2
Making marketing decisions
Lesson 2 of 5
CASE STUDY
Apple: Skimming the New iPhone
Each year Apple launches new iPhone models at high prices. Loyal customers who want the latest technology are willing to pay, giving Apple a high profit on each early sale. When the next models arrive, Apple cuts the price of the older ones or keeps them on sale at a lower price, reaching customers who would not pay the launch price. Apple's strong brand and loyal customers make price skimming possible - a new business with an unknown brand could not do the same.
High
Launch prices for the newest models
Lower
Prices for older models once new ones arrive
openrevise.com
EDEXCEL GCSE BUSINESS · PAPER 2
Key Terms
Making marketing decisions
Lesson 2 of 5
Pricing strategy
The method a business uses to set the price of a product.
Penetration pricing
A low launch price to gain market share quickly.
Price skimming
A high launch price that is lowered over time.
Cost-plus pricing
Adding a percentage mark-up to the cost of a product.
Competitive pricing
Setting a price similar to competitors'.
Promotional pricing
Temporarily reducing prices to boost sales.
Mark-up
The percentage added to cost to set the price.
openrevise.com
EDEXCEL GCSE BUSINESS · PAPER 2
Making marketing decisions
Lesson 2 of 5
YOUR TASK
Price It
12 minutes
Recommend a pricing strategy for each product and justify it: a new energy drink from an unknown brand; the first ever folding smartphone from a famous brand; a local plumber's call-out charge; a supermarket's own-brand milk; last season's football shirts. Then calculate the price of a product costing £15 with a 40% mark-up.
1
Choose a strategy for each product.
2
Justify each choice.
3
Calculate the cost-plus price.
WHAT A GOOD ANSWER SHOWS
A suitable strategy for each with a reason linked to competition, brand, costs or life cycle stage; cost-plus price £21.
openrevise.com
EDEXCEL GCSE BUSINESS · PAPER 2
Can I...?
Making marketing decisions
Lesson 2 of 5
Explain penetration pricing.
Explain price skimming.
Explain cost-plus pricing.
Calculate a cost-plus price.
Explain competitive pricing.
Explain promotional pricing.
Explain the influences on pricing.
openrevise.com
EDEXCEL GCSE BUSINESS · PAPER 2
Summary & Exam Focus
Penetration: low launch price for market share. Skimming: high launch price, lowered later.
Cost-plus: cost + mark-up. Competitive: match rivals. Promotional: temporary discounts.
Influences: technology, competition, market segments and the product life cycle.
EXAM FOCUS
Explain one disadvantage of price skimming for a business launching a new product. (3 marks)
Strategy questions need context: say why the strategy suits (or does not suit) this product and this market.
openrevise.com
← → to move, F to present full screen, G for every slide at once.