Pricing strategies and tactics

Pricing strategies:are used to reach market objectives
1.price skimming:is a strategy in which a high price is set to yield a high profit margin
2.penetration pricing:low prices are set to break into the market or to achieve sudden benefit in market share
3.price leadership:involves the large companies set a market price that all small firms should follow
4.price taking:involved small firms follow the price which set by a price leader.
5.loss leadership:set a very low price in order to encourage consumers to buy other products
6.psychological pricing:to give a impression of value
7.cost-plus pricing:price set is the average costs of a product plus a sum to ensure a profit

Formula revision in UNIT 2

Measuring profitability:
Two ways to measure profitability are the net profit margin and return on capital
1.net profit margin:
net profit before tax/sales

2.return on capital (invested):
net profit before tax/capital invested

Labour turnover: is the proportion of the employees leaving a business over a period of time
number leaving a business over a given period of time/average number employed over a period of time

Absenteeism:the rate of absenteeism is the proportion of employees not at work on a given day
number of staff absent on 1 day/total number of staff

Absenteeism rate for a year:
total number of days lost/total number of days that could be worked *number of staff

Unit costs:
total costs/units of output

Punctuality:
deliveries on time/total deliveries

Capacity utilisation:
actual output per annum/maximum possible output per annum

Cash flow Forecast-Budget Niche market!

So tired to do blog.....anyway I should resume my blog...exams coming soon...especially business,still painful....

Today I did the BUS mock,I thought it should be fine,but actually,it isn`t...I misunderstood the last part in question 1(9marks)

Today I am going to talk about the limitations of budget,cash flow forecast and niche market.

Cash flow forecasting disadvantages:
1.Mistakes can be made in both costs and revenue
2.Unexpected cost increase can lend to inaccuracies and misleading in forecasts
3.Wrong assumption ca be made in forecast,maybe poor market research,and it will also make the forecast inaccurate.

Budget disadvantages:
1.Allocations may be incorrect because the circumstances have changed
2.the both income and costs may increased unexpectedly it also makes the figures inaccurate.

niche market cons and pros:
pros:consumers are willing to pay a high price,has demanded price inelastic

cons:lack of economies of scale may make high costs.