OCR business studies controlled assessment?Watch
6 month pricing strategy- For her short term strategy as her business opens, Asma should use the discrimination strategy as it will help to maximise profit and ensure that the consistent profit ensures the long term success of her business. Using this will motivate Asma to conduct good, thorough market research to gain an insight into the disposable incomes of each group within the market, but it also encourages her to use market research to develop other aspects of her nursery (e.g. Advertising, objectives, improvements). After she has established herself within the market, Asma should change to using the promotional strategy whilst she integrates the cost plus strategy. This will satisfy customers as they are receiving a discount and Asma can slowly reduce promotions to prevent a sudden change which make disappoint consumers.
1 year pricing strategy- Using cost-plus in the long term will prevent Asma having to conduct further market research as she already has an understanding of her market, allowing her to maximise profits using her unique selling points. By using this, Asma will be able to ensure the long term success of her nursery as she can create a buffer against other costs by making the profit she desires. As Asma would have had time to establish her business and gain a credible name, her sales should also be able to maintain through a demand for her service. Using this would allow Asma to generate a consistent rate of return as she will have a set profit margin, regardless of costs, allowing Asma to commit to financial investments (e.g. employ more staff) to improve the quality of her service and, as a result, increase the quality of her service.
5 year pricing strategy- Once Asma has gained a strong position within the market and has gained a large proportion of the market share through a reputable business and an excellent service, she will have enough power to be able to charge a much higher price than that of competitors, as she offers a service that meets the needs more than that of other businesses. As a result, I would recommend Asma uses the Skimming strategy to increase prices initially before bringing them down to a sustainable level which still commands a high profit with ample sales. The high price will create a good image of the brand, to attract wealthy customers which will even further increase her profits. As she has already obtained a loyal customer base, they will be reluctant to leave regardless of the expensive price, as it is a tried and tested brand.
Eventually, the aim of Asma’s business should be to be able to command a large share of the market, to create a loyal customer base, high sales and high profits. She can then exploit this to further increase her profits to fulfil Asma’s goal to achieve a successful business.