Page 17 - Bisiness Studies_Form_3

Business Studies for Secondary Schools

strategy is typical in mass products like approaches to enhance effectiveness.
foodstuffs and household goods. Examples are ‘just below’ prices, which
Discount pricing: The strategy involves involve setting prices lower than a whole
reducing prices to reward customers’ number to make them seem less, while
responses and increase sales. It may be the difference is very small. For instance,
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applied based on the quantity that the a product may be priced in TShs. 999.99
customer purchases, such that the greater instead of TShs. 1,000. Businesses can
the quantity, the lower the price charged also use smaller font sizes for prices to
for each product. This strategy may also make them appear less expensive, and
be used as a seasonal strategy to attract remove commas from large numbers
customers for a short period. For instance, (example TShs 1500 instead of TShs
during festivals like Christmas and Eid, 1,500). Additionally, businesses may use
most retail outlets like supermarkets and loss aversion techniques to frame deals in
stores offer discounts on prices to attract terms of avoided losses rather than potential
more customers. gains, for example, save TSh 10,000.

Discrimination/segmented pricing: The Price bundling: The strategy involves
strategy involves adjusting prices to account packaging two or more products to gain a
for differences in customers or locations. pricing advantage. It also involves selling
The same product may be sold to different products together (in a bundle), typically
customers at different prices, and these at a price that is less than the sum of the
individual components. Thus, the bundled
price differences may be associated with package is usually offered at a discount.
the differences in location. For instance, the For instance, a tour business may charge
same mobile phone may be sold at different a price to a tourist that includes services
prices to a customer in Dar es Salaam like accommodation, transport, and free
compared to a customer in Mwanza. entry to a national park in one package.
Psychological pricing: The strategy Moreover, a car dealer may sell a car to
involves using psychological factors to a customer together with a car insurance
create perceptions of value, affordability, cover.
and prestige. By understanding and Exercise 1.2
implementing psychological pricing, 1. Musa wants to use cost-based
businesses can optimize their pricing pricing to come up with the price
strategies to resonate with customers and for selling Vitenge fabrics.
drive profitability. Psychological pricing
strategies are inexpensive and easy to Costs:
implement, making them accessible to Fabric and materials: TShs 8,000
businesses across industries, and they can per meter
be seamlessly integrated with other pricing

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