Pricing strategies

Text 2 _{Adapted from www.denbypottery.com/all-about-denby?srsltid=AfmBOoqCmocamsMH7YokKTzrUcPD76_Yb_lZHqS-OTu8re8Rckdj-bKS and rocketreach.co/denby-pottery-company-ltd-profihttps://nohat.cc/f/common-daisy-clip-art-flower-clip-art/6481725316136960-201812162124.htmlle_b5d79652}Denby Pottery Company Ltd (Denby)

State two methods of selecting new employees.

Explain three reasons why Denby trains its production employees.

Analyse one advantage for Denby of using price skimming.

Analyse one impact on Denby of a shareholder objective.

Analyse one impact on Denby of a customer objective.

Recommend whether Denby should focus more on the objectives of shareholders or the objectives of customers. Give a reason for your answer.

Text 3 SJ Salon

SJ Salon is a hair salon owned by Sam and Jamila. The business partners met whilst studying hairdressing at college. The partners’ creativity has helped make the salon very successful. SJ Salon is currently the only salon in town and uses cost-plus pricing.

Sam and Jamila are qualified hairdressers who work full-time in the salon. Until recently, the partners employed one part-time and one full-time worker who works 40 hours per week. However, due to increasing customer demand, two additional part-time employees have recently been recruited.

Sam and Jamila have just found out that a national hairdressing chain is planning to open a new salon in their town. They are concerned about the impact of this competition. The partners asked 200 current customers to complete a short questionnaire. The results show that:

• 130 of the customers have used SJ Salon since 2019

• 104 of the customers were aware of the national hairdressing chain

• 84 of the customers would consider trying the new hair salon, if its prices were cheaper

• 66 of the customers consider quality of service to be more important than price.

When SJ Salon was set up in 2014, Sam wrote a business plan. He has not written another one since then, as the business has been profitable. However, Sam now thinks that a new business plan should be written to help the business succeed against any new competition. Jamila disagrees, as the original business plan took Sam 30 hours to write. She feels that his time would be better spent keeping current customers satisfied.

Creativity is one characteristic of an entrepreneur.

Identify one other characteristic of an entrepreneur.

Analyse two advantages for SJ Salon of using cost-plus pricing.

Sam and Jamila want to improve communication with their employees now that the size of the workforce has increased. They are considering two methods:

• a weekly team meeting which all employees will be expected to attend

• a weekly email sent to all employees.

* Evaluate, using the data in Text 3, whether Sam should write a new business plan.

Identify one likely objective of an employee.

Analyse two disadvantages for Shinz Ltd of operating as a private limited company.

Tom is considering whether to use competitor pricing or price skimming for the new ‘resin polish’ service.

Analyse one advantage for Shinz Ltd of using each pricing method.

Competitor pricing

Price skimming

Recommend which of the two pricing methods Shinz Ltd should use. Give reasons for your answer.

* Evaluate, with reference to the data in Text 3, whether Shinz Ltd should merge with

Littlelong Motors Ltd.

A hairdresser charges the same price for haircuts as two other hairdressers in the local area.

Which pricing method is the hairdresser using?

A Competitor pricing

B Cost-plus pricing

C Penetration pricing

D Promotional pricing

A store which sells frozen food buys oven chips for 29p a pack. The store usually sells the oven chips for 99p a pack.

How much should the store charge for the oven chips if it wishes to use them as a loss leader?

A 29p a pack

B Between 29p and 99p a pack

C Less than 29p a pack

D More than 99p a pack