Unit 4 Business Environment - Investigate the behaviour of organisations and the market environment
Behaviour and strategies adopted by firms
What competitive strategies can organisations use to improve market performance?
Pricing Strategies
These are strategies used by firms to improve market performance, the only factor relating to the product which is changed is price.
Price Wars
- What are price wars?
- Why do firms involve themselves in price wars?
- What type of markets would you find price wars?
- Give an example of a price war?
Skimming
- What is skimming?
- Why do firms use skimming?
- What type of markets would you find skimming?
- Name an example of a skimming?
Destruction Pricing
- What is destruction pricing?
- Why do firms involve themselves in destruction pricing?
- What type of markets would you find destruction pricing?
- Name an example of destruction pricing?
Expansion Pricing
- What is expansion pricing?
- Why do firms involve themselves in expansion pricing?
- What type of markets would you find expansion pricing?
- Name an example of expansion pricing?
Penetration Pricing
- What is penetration pricing?
- Why do firms involve themselves in penetration pricing?
- What type of markets would you find penetration pricing?
- Name an example of penetration pricing?
Non-Pricing Strategies
Pricing is just one way to improve market performance, non pricing strategies involve other techniques to improve market performance. Also take a look at the Marketing unit.
Is price important?
The Italians produce Fiat cars, which was one of the cheapest new cars in the UK. However the most popular new cars are Fords!
What are non-pricing strategies?
When consumers go shopping, they do not base their buying decisions just on price, they consider other factors.
Non-Pricing strategies are used by companies to increase sales, expand market share, retain existing and attract new customers. . .
Non-Pricing strategies are methods and techniques used by firms that don't involve a change in the price of the product.
Promotion is important. . .
Promotions and offers are also important to consumers when choosing products.
They will be "tempted" by:
- free gifts
- money-off coupons
- store displays
- publicity in magazines
Advertising is important. . .
Advertising through the media, can make products more attractive and persuade people to purchase them.
Advertising can create in peoples' minds an image for a product. . .
Branding is important. . .
Branding is a valuable marketing tool. Branding is the creation of an identity for a company or product.
Branding allows companies to maintain their current market status and enter or create new markets. . .
Non-Pricing Strategies can be found in all of the four types of markets: monopolistic, oligopolistic, competitive and even non-competitive markets.
However Non-Pricing Strategies will be found most strongly in oligopolistic markets and will be a feature of competitive markets
Examples
A good example of Non-Pricing Strategies are those employed by the computer firm Apple in trying to sell their Powerbook at the end of the 1990s
It was used in the film Mission Impossible and was then promoted in a range of TV adverts using clips from the film. . .
This website will self-destruct in five seconds.....
Sony did something very similar with the James Bond film, Casino Royale, they used the film to promote many of their products.
Shaken not stirred...
