CAIE IGCSE Business Studies 3.3.2 price
Practise price questions by identifying pricing methods, explaining factors and justifying whether a price change suits the case.
- Syllabus
- 2027–2029
- Course
- Business 0264
Exam points
- State factors affecting price, such as costs, competition, demand or break-even needs.
- Identify pricing methods such as cost-plus, competitive, penetration or skimming.
- Justify price increases or methods by linking customer reaction and business costs.
3.3.2—Price question 1
[Maximum number: 4]
CFG is a social enterprise. It buys cocoa beans from local farmers and then uses the beans to make chocolate. Being ethical is important to the business. CFG has developed a new chocolate bar. The Marketing Manager plans to use skimming as its pricing method, and retailers as its distribution channel for the new product. He knows there are many legal controls over marketing that might affect a business.
Outline one advantage and one disadvantage to CFG of using skimming as its pricing method.
Advantage:
Disadvantage:
Award 1 mark for each relevant advantage/disadvantage (max 2).
Award 1 mark for each relevant reference to this business (max 2).
Points might include:
Advantages:
- Helps establish a high-quality image/customers may think it is a good quality [k] which may also help as want to be ethical [app]
- Can quickly recover research/development costs [k] which is important as developed a new product [app]
- Higher revenue per item [k] for its chocolate [app]
- May have a lower break-even output [k]
Disadvantages:
- High price might discourage (potential) customers [k] for this social enterprise [app]
- High prices/profitability could encourage competitors to enter market [k] so may not be able to support local farmers [app]
Other appropriate responses should be credited.
To use words from the stem as application, the reference must be appropriate (i.e. make sense) in relation to the point being made.
The following words are likely to be appropriate for this question:
- Social enterprise
- Cocoa beans
- Local farmers
- Chocolate (bar)
- Retailers
- Ethical
- (Developed) a new product
- Legal controls over marketing
Other appropriate responses can be credited.
All question bank results loaded