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only)</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../24500/glossary-organizational-planning-tools-hl.html" title="Glossary: Organizational planning tools (HL)">Glossary: Organizational planning tools (HL)</a></li></ul></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../21699/unit-2.html" title="Unit 2">Unit 2</a></li><ul class="level-2 "><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21753/21-functions-evolution-of-hrm.html" title="2.1 Functions & evolution of HRM">2.1 Functions & evolution of HRM</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../25388/glossary.html" title="Glossary">Glossary</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right 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relations (HL only)">2.6 Industrial/employee relations (HL only)</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../25125/glossary-industrialemployee-relations.html" title="Glossary: Industrial/employee relations">Glossary: Industrial/employee relations</a></li></ul></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../21670/unit-3.html" title="Unit 3">Unit 3</a></li><ul class="level-2 "><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21744/31-sources-of-finance.html" title="3.1 Sources of finance">3.1 Sources of finance</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../24501/glossary-sources-of-finance.html" title="Glossary: Sources of finance">Glossary: Sources of finance</a></li></ul><li class=" 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href="../22093/glossary-break-even-analysis.html" title="Glossary: Break-even analysis">Glossary: Break-even analysis</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21747/34-final-accounts.html" title="3.4 Final accounts">3.4 Final accounts</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../31367/glossary-final-accounts.html" title="Glossary: Final accounts">Glossary: Final accounts</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21748/35-profitability-and-liquidity-ratio-analysis.html" title="3.5 Profitability and liquidity ratio analysis">3.5 Profitability and liquidity ratio analysis</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../25111/glossary-profitability-and-liquidity-ratio-analysis.html" title="Glossary: Profitability and liquidity ratio analysis">Glossary: Profitability and liquidity ratio analysis</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21749/36-efficiency-ratio-analysis-hl-only.html" title="3.6 Efficiency ratio analysis (HL only)">3.6 Efficiency ratio analysis (HL only)</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../25114/glossary-efficiency-ratios.html" title="Glossary: Efficiency ratios">Glossary: Efficiency ratios</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21750/37-cash-flow.html" title="3.7 Cash flow">3.7 Cash flow</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../25118/cash-flow-forecasts.html" title="Cash flow forecasts">Cash flow forecasts</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../31376/glossary-cash-flow.html" title="Glossary: Cash flow">Glossary: Cash flow</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21751/38-investment-appraisal.html" title="3.8 Investment appraisal">3.8 Investment appraisal</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../31377/glossary-investment-appraisal-.html" title="Glossary: Investment appraisal ">Glossary: Investment appraisal </a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21752/39-budgets-hl-only.html" title="3.9 Budgets (HL only)">3.9 Budgets (HL only)</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../31378/39-budgets-hl-only-glossary.html" title="3.9 Budgets (HL Only) Glossary">3.9 Budgets (HL Only) Glossary</a></li></ul></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../21684/unit-4.html" title="Unit 4">Unit 4</a></li><ul class="level-2 "><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21767/41-the-role-of-marketing.html" title="4.1 The role of marketing">4.1 The role of marketing</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../25618/glossary-the-role-of-marketing.html" title="Glossary: The role of marketing">Glossary: The role of marketing</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21768/42-marketing-planning.html" title="4.2 Marketing planning">4.2 Marketing planning</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../28328/glossary-marketing-planning.html" title="Glossary: Marketing planning">Glossary: Marketing planning</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21769/43-sales-forecasting-hl-only.html" title="4.3 Sales forecasting (HL only)">4.3 Sales forecasting (HL only)</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../25713/glossary-sales-forecasting.html" title="Glossary: Sales forecasting">Glossary: Sales forecasting</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21713/44-market-research.html" title="4.4 Market research">4.4 Market research</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../25208/glossary-market-research.html" title="Glossary: Market research">Glossary: Market research</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21770/45-the-four-ps.html" title="4.5 The four Ps">4.5 The four Ps</a></li><ul class="level-3 "><li class=" parent" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="Product">Product</a></li><ul class="level-4 "><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../22627/glossary-product.html" title="Glossary: Product">Glossary: Product</a></li></ul><li class=" parent" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../22525/price.html" title="Price">Price</a></li><ul class="level-4 "><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../22548/glossary-price.html" title="Glossary: Price">Glossary: Price</a></li></ul><li class=" parent" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../22567/promotion.html" title="Promotion">Promotion</a></li><ul class="level-4 "><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../22704/45-promotion-glossary.html" title="4.5 Promotion - Glossary">4.5 Promotion - Glossary</a></li></ul><li class=" parent" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../22745/place.html" title="Place">Place</a></li><ul class="level-4 "><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../23813/45-place-glossary.html" title="4.5 Place - Glossary">4.5 Place - Glossary</a></li></ul></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21774/46-the-extended-marketing-mix-7-ps-hl.html" title="4.6 The extended marketing mix (7 Ps) (HL)">4.6 The extended marketing mix (7 Ps) (HL)</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../23814/glossary-the-extended-marketing-mix-hl.html" title="Glossary: The extended marketing mix (HL)">Glossary: The extended marketing mix (HL)</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21772/47-international-marketing-hl-only.html" title="4.7 International marketing (HL only)">4.7 International marketing (HL only)</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../23815/glossary-international-marketing-hl.html" title="Glossary: International Marketing (HL)">Glossary: International Marketing (HL)</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21773/48-e-commerce.html" title="4.8 E-commerce">4.8 E-commerce</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../23797/glossary-e-commerce.html" title="Glossary: E-commerce">Glossary: E-commerce</a></li></ul></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../21688/unit-5.html" title="Unit 5">Unit 5</a></li><ul class="level-2 "><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21937/51-the-role-of-operations-management.html" title="5.1 The role of operations management">5.1 The role of operations management</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../24843/glossary.html" title="Glossary">Glossary</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21938/52-production-methods.html" title="5.2 Production methods">5.2 Production methods</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../24848/glossary.html" title="Glossary">Glossary</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21939/53-lean-production-quality-management-hl.html" title="5.3 Lean production & quality management (HL)">5.3 Lean production & quality management (HL)</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../24839/glossary-lean-production-and-quality-management.html" title="Glossary: Lean Production and quality management">Glossary: Lean Production and quality management</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21700/54-location.html" title="5.4 Location">5.4 Location</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../24959/glossary.html" title="Glossary">Glossary</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21695/55-production-planning-hl.html" title="5.5 Production planning (HL)">5.5 Production planning (HL)</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../25032/glossary-production-planning.html" title="Glossary: Production planning">Glossary: Production planning</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../33222/56-research-development-hl.html" title="5.6 Research & development (HL)">5.6 Research & development (HL)</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../34014/glossary-research-development.html" title="Glossary: Research & Development">Glossary: Research & Development</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21941/57-crisis-management-contingency-planning-hl.html" title="5.7 Crisis management & contingency planning (HL)">5.7 Crisis management & contingency planning (HL)</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../25042/glossary.html" title="Glossary">Glossary</a></li></ul></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../25115/cuegis.html" title="CUEGIS">CUEGIS</a></li><ul class="level-2 "><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="The 6 CUEGIS concepts">The 6 CUEGIS concepts</a></li><ul class="level-3 "><li class=" parent" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="Ethics">Ethics</a></li><ul class="level-4 "><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../21954/mcdonalds-supersize-me.html" title="McDonald's - Supersize Me">McDonald's - Supersize Me</a></li></ul></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="The CUEGIS essay">The CUEGIS essay</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../22876/planning-your-cuegis-essay.html" title="Planning your CUEGIS essay">Planning your CUEGIS essay</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../33806/paper-2-section-c-questions.html" title="Paper 2 Section C Questions">Paper 2 Section C Questions</a></li></ul></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../33959/the-ia.html" title="The IA">The IA</a></li><ul class="level-2 "><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="HL IA">HL IA</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../22190/35-sample-research-questions-for-the-hl-ia.html" title="35 sample research questions for the HL IA">35 sample research questions for the HL IA</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../22200/hl-ia-student-checklist.html" title="HL IA - Student Checklist">HL IA - Student Checklist</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../33508/ia-hl-poster.html" title="IA HL Poster">IA HL Poster</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="SL IA">SL IA</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../22146/sl-ia-20-sample-titles.html" title="SL IA - 20 Sample Titles">SL IA - 20 Sample Titles</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../38181/faq-about-the-sl-ia.html" title="FAQ about the SL IA">FAQ about the SL IA</a></li></ul></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../22114/exams.html" title="Exams">Exams</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../22115/command-terms.html" title="Command Terms">Command Terms</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../36599/glossary-of-key-terms.html" title="Glossary of key terms">Glossary of key terms</a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../38059/flashcards-revision.html" title="Flashcards - Revision">Flashcards - Revision</a></li><ul class="level-3 "><li class=" parent" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../38060/flashcards-revision-unit-1.html" title="Flashcards - Revision (Unit 1)">Flashcards - Revision (Unit 1)</a></li><ul class="level-4 "><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38056/unit-11-revision-flashcards.html" title="Unit 1.1 Revision Flashcards">Unit 1.1 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38061/unit-12-revision-flashcards.html" title="Unit 1.2 Revision Flashcards">Unit 1.2 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38067/unit-13-revision-flashcards.html" title="Unit 1.3 Revision Flashcards">Unit 1.3 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38092/unit-14-revision-flashcards.html" title="Unit 1.4 Revision Flashcards">Unit 1.4 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38096/unit-15-revision-flashcards.html" title="Unit 1.5 Revision Flashcards">Unit 1.5 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38102/unit-16-revision-flashcards.html" title="Unit 1.6 Revision Flashcards">Unit 1.6 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38103/unit-17-revision-flashcards.html" title="Unit 1.7 Revision Flashcards">Unit 1.7 Revision Flashcards</a></li></ul><li class=" parent" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../38114/flashcards-revision-unit-2.html" title="Flashcards - Revision (Unit 2)">Flashcards - Revision (Unit 2)</a></li><ul class="level-4 "><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38121/unit-21-revision-flashcards.html" title="Unit 2.1 Revision Flashcards">Unit 2.1 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38125/unit-22-revision-flashcards.html" title="Unit 2.2 Revision Flashcards">Unit 2.2 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38126/unit-23-revision-flashcards.html" title="Unit 2.3 Revision Flashcards">Unit 2.3 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38144/unit-24-revision-flashcards.html" title="Unit 2.4 Revision Flashcards">Unit 2.4 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38146/unit-25-revision-flashcards.html" title="Unit 2.5 Revision Flashcards">Unit 2.5 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38147/unit-26-revision-flashcards-hl-only.html" title="Unit 2.6 Revision Flashcards (HL only)">Unit 2.6 Revision Flashcards (HL only)</a></li></ul><li class=" parent" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../38149/flashcards-revision-unit-3.html" title="Flashcards - Revision (Unit 3)">Flashcards - Revision (Unit 3)</a></li><ul class="level-4 "><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38153/unit-31-revision-flashcards.html" title="Unit 3.1 Revision Flashcards">Unit 3.1 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38154/unit-32-revision-flashcards.html" title="Unit 3.2 Revision Flashcards">Unit 3.2 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38182/unit-33-revision-flashcards.html" title="Unit 3.3 Revision Flashcards">Unit 3.3 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38183/unit-34-revision-flashcards.html" title="Unit 3.4 Revision Flashcards">Unit 3.4 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38191/unit-35-revision-flashcards.html" title="Unit 3.5 Revision Flashcards">Unit 3.5 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38192/unit-36-revision-flashcards-hl.html" title="Unit 3.6 Revision Flashcards (HL)">Unit 3.6 Revision Flashcards (HL)</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38193/unit-37-revision-flashcards.html" title="Unit 3.7 Revision Flashcards">Unit 3.7 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38194/unit-38-revision-flashcards.html" title="Unit 3.8 Revision Flashcards">Unit 3.8 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38195/unit-39-revision-flashcards.html" title="Unit 3.9 Revision Flashcards">Unit 3.9 Revision Flashcards</a></li></ul><li class=" parent" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../38196/flashcards-revision-unit-4.html" title="Flashcards - Revision (Unit 4)">Flashcards - Revision (Unit 4)</a></li><ul class="level-4 "><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38198/unit-41-revision-flashcards.html" title="Unit 4.1 Revision Flashcards">Unit 4.1 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38203/unit-42-revision-flashcards.html" title="Unit 4.2 Revision Flashcards">Unit 4.2 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38217/unit-43-revision-flashcards.html" title="Unit 4.3 Revision Flashcards">Unit 4.3 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38218/unit-44-revision-flashcards.html" title="Unit 4.4 Revision Flashcards">Unit 4.4 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38219/unit-45a-product-revision-flashcards.html" title="Unit 4.5a Product Revision Flashcards">Unit 4.5a Product Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38220/unit-45b-price-revision-flashcards.html" title="Unit 4.5b Price Revision Flashcards">Unit 4.5b Price Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38221/unit-45c-promotion-revision-flashcards.html" title="Unit 4.5c Promotion Revision Flashcards">Unit 4.5c Promotion Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38222/unit-45d-promotion-revision-flashcards.html" title="Unit 4.5d Promotion Revision Flashcards">Unit 4.5d Promotion Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38223/unit-46-revision-flashcards-hl.html" title="Unit 4.6 Revision Flashcards (HL)">Unit 4.6 Revision Flashcards (HL)</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38224/unit-47-revision-flashcards-hl.html" title="Unit 4.7 Revision Flashcards (HL)">Unit 4.7 Revision Flashcards (HL)</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38225/unit-48-e-commerce-flashcards.html" title="Unit 4.8 E-commerce Flashcards">Unit 4.8 E-commerce Flashcards</a></li></ul><li class=" parent" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../38232/flashcards-revision-unit-5.html" title="Flashcards - Revision (Unit 5)">Flashcards - Revision (Unit 5)</a></li><ul class="level-4 "><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38233/unit-51-revision-flashcards.html" title="Unit 5.1 Revision Flashcards">Unit 5.1 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38234/unit-52-revision-flashcards.html" title="Unit 5.2 Revision Flashcards">Unit 5.2 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38235/unit-53-revision-flashcards-hl.html" title="Unit 5.3 Revision Flashcards (HL)">Unit 5.3 Revision Flashcards (HL)</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38236/unit-54-revision-flashcards.html" title="Unit 5.4 Revision Flashcards">Unit 5.4 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38237/unit-55-revision-flashcards-hl.html" title="Unit 5.5 Revision Flashcards (HL)">Unit 5.5 Revision Flashcards (HL)</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38238/unit-56-revision-flashcards-hl.html" title="Unit 5.6 Revision Flashcards (HL)">Unit 5.6 Revision Flashcards (HL)</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../38239/unit-57-revision-flashcards-hl.html" title="Unit 5.7 Revision Flashcards (HL)">Unit 5.7 Revision Flashcards (HL)</a></li></ul></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../33830/formulae-quiz.html" title="Formulae Quiz">Formulae Quiz</a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="Paper 1 Pre-release case study">Paper 1 Pre-release case study</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../44969/n22-case-study-ele-plc.html" title="N22 Case Study (ELE PLC)">N22 Case Study (ELE PLC)</a></li><li class=" parent" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="M22 (Peacewick Uni)">M22 (Peacewick Uni)</a></li><ul class="level-4 "><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../44106/additional-exam-questions-paper-1.html" title="Additional exam questions (Paper 1)">Additional exam questions (Paper 1)</a></li></ul><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../32840/may-2020-p-s-trawlers.html" title="May 2020 (P&S Trawlers)">May 2020 (P&S Trawlers)</a></li><li class=" parent" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="M23 Paper 1">M23 Paper 1</a></li><ul class="level-4 "><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../47825/paper-1-svt-study-guide-shirin-karimi.html" title="Paper 1 SVT Study Guide (Shirin Karimi)">Paper 1 SVT Study Guide (Shirin Karimi)</a></li></ul></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../26095/exam-study-tips-resources.html" title="Exam & Study tips (resources)">Exam & Study tips (resources)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../31342/revision-exams-top-tips.html" title="Revision & Exams - Top tips">Revision & Exams - Top tips</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../47460/top-tips-for-m23-exams.html" title="Top Tips for M23 Exams">Top Tips for M23 Exams</a></li></ul></ul><li class=" parent std-toplevel" style="padding-left: 4px"><i class="expander fa fa-caret-right "></i><a class="" href="../43522/unit-1-intro-to-bm.html" title="Unit 1 - Intro to BM">Unit 1 - Intro to BM</a></li><ul class="level-1 "><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../44034/11-what-is-a-business.html" title="1.1 What is a business?">1.1 What is a business?</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../../task/399695.html" title="The nature of business">The nature of business</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../../task/399694.html" title="Primary, secondary, tertiary, & quaternary sectors">Primary, secondary, tertiary, & quaternary sectors</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../../task/399693.html" title="Entrepreneurship">Entrepreneurship</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../../task/399692.html" title="Challenges & opportunities for starting a business">Challenges & opportunities for starting a business</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../../task/399691.html" title="1.1 True or False Quiz">1.1 True or False Quiz</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../../task/399690.html" title="1.1 Revision Flashcards">1.1 Revision Flashcards</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../../task/399689.html" title="1.1 Glossary of key terms">1.1 Glossary of key terms</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../../task/399681.html" title="1.2 Types of business entities">1.2 Types of business entities</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../../task/399688.html" title="Public & private sectors">Public & private sectors</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../../task/399687.html" title="Types of for-profit organizations">Types of for-profit organizations</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../../task/399686.html" title="For-profit social enterprises">For-profit social enterprises</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../../task/399685.html" title="Non-profit social enterprises">Non-profit social enterprises</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../../task/399684.html" title="True or False quiz">True or False quiz</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../../task/399683.html" title="1.2 Revision Flashcards">1.2 Revision Flashcards</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../../task/399682.html" title="1.2 Glossary of key terms">1.2 Glossary of key terms</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../44041/13-business-objectives.html" title="1.3 Business objectives">1.3 Business objectives</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../../task/399679.html" title="Vision and mission statements">Vision and mission statements</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../../task/399680.html" title="Common business objectives">Common business objectives</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../../task/399678.html" title="Strategic & tactical objectives">Strategic & tactical objectives</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../../task/399677.html" title="Corporate social responsibility">Corporate social responsibility</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../../task/399676.html" title="1.3 Revision Flashcards">1.3 Revision Flashcards</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../../task/399674.html" title="True or False quiz">True or False quiz</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../../task/399675.html" title="1.3 Glossary of Key terms">1.3 Glossary of Key terms</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../44044/14-stakeholders.html" title="1.4 Stakeholders">1.4 Stakeholders</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../../task/399673.html" title="The interests of stakeholders">The interests of stakeholders</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../../task/399672.html" title="Conflict between stakeholders">Conflict between stakeholders</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../../task/399670.html" title="Unit 1.4 Revision Flashcards">Unit 1.4 Revision Flashcards</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../../task/399669.html" title="1.4 True or False">1.4 True or False</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../../task/399671.html" title="1.4 Glossary of Key terms">1.4 Glossary of Key terms</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../44045/15-growth-and-evolution.html" title="1.5 Growth and evolution">1.5 Growth and evolution</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44212/economies-diseconomies-of-scale.html" title="Economies & diseconomies of scale">Economies & diseconomies of scale</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44214/internal-and-external-growth.html" title="Internal and external growth">Internal and external growth</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44220/external-growth-methods.html" title="External growth methods">External growth methods</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44219/reasons-to-grow-or-stay-small.html" title="Reasons to grow or stay small">Reasons to grow or stay small</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45586/unit-15revision-flashcards.html" title="Unit 1.5 Revision Flashcards">Unit 1.5 Revision Flashcards</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45450/true-or-false-quiz.html" title="True or False quiz">True or False quiz</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../43673/15-glossary-of-key-terms.html" title="1.5 Glossary of key terms">1.5 Glossary of key terms</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../44046/16-multinational-companies.html" title="1.6 Multinational companies">1.6 Multinational companies</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44236/the-impact-of-mncs-on-host-countries-ao3.html" title="The impact of MNCs on host countries (AO3)">The impact of MNCs on host countries (AO3)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44240/video-documentaries-mncs.html" title="Video documentaries - MNCs">Video documentaries - MNCs</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45587/16-glossary-of-key-terms.html" title="1.6 Glossary of key terms">1.6 Glossary of key terms</a></li></ul></ul><li class=" parent std-toplevel" style="padding-left: 4px"><i class="expander fa fa-caret-right "></i><a class="" href="../43530/unit-2-hrm.html" title="Unit 2 - HRM">Unit 2 - HRM</a></li><ul class="level-1 "><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../44253/21-introduction-to-hrm.html" title="2.1 Introduction to HRM">2.1 Introduction to HRM</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44256/role-of-hrm.html" title="Role of HRM">Role of HRM</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44257/factors-that-influence-hr-planning.html" title="Factors that influence HR planning">Factors that influence HR planning</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44282/reasons-for-resistance-to-change.html" title="Reasons for resistance to change">Reasons for resistance to change</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44283/hr-strategies-for-reducing-the-impact-of-change-resistance-to-ch.html" title="HR strategies for reducing the impact of change & resistance to change">HR strategies for reducing the impact of change & resistance to change</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45458/21-true-or-false-quiz.html" title="2.1 True or False quiz">2.1 True or False quiz</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../43677/21-glossary-of-key-terms.html" title="2.1 Glossary of key terms">2.1 Glossary of key terms</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../43875/22-organizational-structure.html" title="2.2 Organizational structure">2.2 Organizational structure</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44296/terminology-for-understanding-organizational-structures.html" title="Terminology for understanding organizational structures">Terminology for understanding organizational structures</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44310/types-of-organization-charts.html" title="Types of organization charts">Types of organization charts</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44323/appropriateness-of-organizational-structures-and-external-factor.html" title="Appropriateness of organizational structures and external factors">Appropriateness of organizational structures and external factors</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44316/changes-in-organizational-structures-hl.html" title="Changes in organizational structures (HL)">Changes in organizational structures (HL)</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../44338/23-leadership-and-management.html" title="2.3 Leadership and management">2.3 Leadership and management</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44343/scientific-intuitive-management-hl.html" title="Scientific & intuitive management (HL)">Scientific & intuitive management (HL)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44339/management-and-leadership.html" title="Management and leadership">Management and leadership</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44340/leadership-styles.html" title="Leadership styles">Leadership styles</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45462/23-true-or-false-quiz.html" title="2.3 True or False Quiz">2.3 True or False Quiz</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../43829/24-motivation-and-demotivation.html" title="2.4 Motivation and demotivation">2.4 Motivation and demotivation</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44349/motivation-theories-sl-hl.html" title="Motivation theories (SL & HL)">Motivation theories (SL & HL)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44353/motivation-theories-hl.html" title="Motivation theories (HL)">Motivation theories (HL)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44354/labour-turnover-hl.html" title="Labour turnover (HL)">Labour turnover (HL)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44361/types-of-appraisal-hl.html" title="Types of appraisal (HL)">Types of appraisal (HL)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44383/methods-of-recruitment-hl.html" title="Methods of recruitment (HL)">Methods of recruitment (HL)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44382/internal-external-recruitment-hl.html" title="Internal & external recruitment (HL)">Internal & external recruitment (HL)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44363/types-of-financial-rewards.html" title="Types of financial rewards">Types of financial rewards</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44370/types-of-non-financial-rewards.html" title="Types of non-financial rewards">Types of non-financial rewards</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44371/types-of-training.html" title="Types of training">Types of training</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../44390/25-organizational-corporate-culture-hl.html" title="2.5 Organizational (corporate) culture (HL)">2.5 Organizational (corporate) culture (HL)</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44392/organizational-culture-hl.html" title="Organizational culture (HL)">Organizational culture (HL)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44393/types-of-organizational-culture-hl.html" title="Types of organizational culture (HL)">Types of organizational culture (HL)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44394/cultural-clashes-hl.html" title="Cultural clashes (HL)">Cultural clashes (HL)</a></li></ul><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../44247/26-communication.html" title="2.6 Communication">2.6 Communication</a></li></ul><li class=" parent std-toplevel" style="padding-left: 4px"><i class="expander fa fa-caret-right "></i><a class="" href="../43545/unit-3-finance.html" title="Unit 3 - Finance">Unit 3 - Finance</a></li><ul class="level-1 "><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../44435/31-introduction-to-finance.html" title="3.1 Introduction to finance">3.1 Introduction to finance</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44431/31-introduction-to-finance-role-of-finance.html" title="3.1 Introduction to finance - role of finance">3.1 Introduction to finance - role of finance</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45634/31-glossary-of-key-term.html" title="3.1 Glossary of key term">3.1 Glossary of key term</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../44436/32-sources-of-finance.html" title="3.2 Sources of finance">3.2 Sources of finance</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44437/internal-sources-of-finance.html" title="Internal sources of finance">Internal sources of finance</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44450/external-sources-of-finance.html" title="External sources of finance">External sources of finance</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44479/appropriateness-of-sources-of-finance.html" title="Appropriateness of sources of finance">Appropriateness of sources of finance</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45483/32-true-or-false-quiz.html" title="3.2 True or False Quiz">3.2 True or False Quiz</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../43688/32-glossary-of-key-terms.html" title="3.2 Glossary of key terms">3.2 Glossary of key terms</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../44486/33-costs-and-revenues.html" title="3.3 Costs and revenues">3.3 Costs and revenues</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44487/types-of-costs.html" title="Types of costs">Types of costs</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44491/total-revenue-revenue-streams.html" title="Total revenue & revenue streams">Total revenue & revenue streams</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45484/33-true-or-false-quiz.html" title="3.3 True or false quiz">3.3 True or false quiz</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45657/33-glossary-of-key-terms.html" title="3.3 Glossary of key terms">3.3 Glossary of key terms</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../44492/34-final-accounts.html" title="3.4 Final accounts">3.4 Final accounts</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44527/the-purpose-of-accounts-to-different-stakeholders.html" title="The purpose of accounts to different stakeholders">The purpose of accounts to different stakeholders</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44577/profit-loss-account.html" title="Profit & loss account">Profit & loss account</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44579/balance-sheets.html" title="Balance sheets">Balance sheets</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44560/types-of-intangible-assets.html" title="Types of intangible assets">Types of intangible assets</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44585/depreciation-hl.html" title="Depreciation (HL)">Depreciation (HL)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45919/34-true-or-false-quiz.html" title="3.4 True or False Quiz">3.4 True or False Quiz</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45658/34-glossary-of-key-terms.html" title="3.4 Glossary of key terms">3.4 Glossary of key terms</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../44593/35-profitability-liquidity-ratio-analysis.html" title="3.5 Profitability & liquidity ratio analysis">3.5 Profitability & liquidity ratio analysis</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44595/profitability-ratios.html" title="Profitability ratios">Profitability ratios</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44626/liquidity-ratios.html" title="Liquidity ratios">Liquidity ratios</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45486/35-true-or-false-quiz.html" title="3.5 True or False Quiz">3.5 True or False Quiz</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45661/35-glossary-of-key-terms.html" title="3.5 Glossary of key terms">3.5 Glossary of key terms</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../44627/36-efficiency-ratio-analysis-hl-only.html" title="3.6 Efficiency ratio analysis (HL only)">3.6 Efficiency ratio analysis (HL only)</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44805/efficiency-ratios-hl.html" title="Efficiency ratios (HL)">Efficiency ratios (HL)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44633/insolvency-versus-bankruptcy.html" title="Insolvency versus bankruptcy">Insolvency versus bankruptcy</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45488/36-true-or-false-quiz.html" title="3.6 True or False Quiz">3.6 True or False Quiz</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45662/36-glossary-of-key-terms.html" title="3.6 Glossary of key terms">3.6 Glossary of key terms</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../44493/37-cash-flow.html" title="3.7 Cash flow">3.7 Cash flow</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44502/the-difference-between-profit-cash-flow.html" title="The difference between profit & cash flow">The difference between profit & cash flow</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44506/working-capital.html" title="Working capital">Working capital</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44557/liquidity-position.html" title="Liquidity position">Liquidity position</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44558/cash-flow-forecasts.html" title="Cash flow forecasts">Cash flow forecasts</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44507/relationship-between-investment-profit-cash-flow.html" title="Relationship between investment, profit & cash flow">Relationship between investment, profit & cash flow</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44509/strategies-for-dealing-with-cash-flow-problems.html" title="Strategies for dealing with cash flow problems">Strategies for dealing with cash flow problems</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45493/37-true-or-false.html" title="3.7 True or False">3.7 True or False</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../43687/37-glossary-of-key-terms.html" title="3.7 Glossary of key terms">3.7 Glossary of key terms</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../44515/38-investment-appraisal.html" title="3.8 Investment appraisal">3.8 Investment appraisal</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44516/payback-period-average-rate-of-return.html" title="Payback period & Average rate of return">Payback period & Average rate of return</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44519/net-present-value-npv-hl.html" title="Net present value (NPV) (HL)">Net present value (NPV) (HL)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45494/38-true-or-false-quiz.html" title="3.8 True or False Quiz">3.8 True or False Quiz</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../43693/38-glossary-of-key-terms.html" title="3.8 Glossary of key terms">3.8 Glossary of key terms</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../44564/39-budgets-hl.html" title="3.9 Budgets (HL)">3.9 Budgets (HL)</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44565/the-difference-between-cost-profit-centres.html" title="The difference between cost & profit centres">The difference between cost & profit centres</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44568/the-roles-of-cost-profit-centres.html" title="The roles of cost & profit centres">The roles of cost & profit centres</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44576/constructing-budgets.html" title="Constructing budgets">Constructing budgets</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44569/variances.html" title="Variances">Variances</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44571/the-importance-of-budgets-variances.html" title="The importance of budgets & variances">The importance of budgets & variances</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45495/39-true-or-false-quiz.html" title="3.9 True or False Quiz">3.9 True or False Quiz</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../43694/39-glossary-of-key-terms.html" title="3.9 Glossary of key terms">3.9 Glossary of key terms</a></li></ul></ul><li class="ancestor parent std-toplevel" style="padding-left: 4px"><i class="expander fa fa-caret-right fa-rotate-90"></i><a class="" href="../43547/unit-4-marketing.html" title="Unit 4 - Marketing">Unit 4 - Marketing</a></li><ul class="level-1 expanded"><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../44637/41-introduction-to-marketing.html" title="4.1 Introduction to marketing">4.1 Introduction to marketing</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44638/market-orientation-vs-product-orientation.html" title="Market orientation vs Product orientation">Market orientation vs Product orientation</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44639/market-share.html" title="Market share">Market share</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44641/market-growth.html" title="Market growth">Market growth</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44642/importance-of-market-share-market-leadership-hl.html" title="Importance of market share & market leadership (HL)">Importance of market share & market leadership (HL)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../43695/41-glossary-of-key-terms.html" title="4.1 Glossary of key terms">4.1 Glossary of key terms</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../43823/42-marketing-planning.html" title="4.2 Marketing planning">4.2 Marketing planning</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44645/the-role-of-marketing-planning.html" title="The role of marketing planning">The role of marketing planning</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44654/segmentation-targeting-and-positioning.html" title="Segmentation, targeting, and positioning">Segmentation, targeting, and positioning</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44646/difference-between-niche-mass-market.html" title="Difference between niche & mass market">Difference between niche & mass market</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../43821/the-importance-of-having-a-usp.html" title="The importance of having a USP">The importance of having a USP</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44655/how-organizations-differentiate-themselves.html" title="How organizations differentiate themselves">How organizations differentiate themselves</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../43834/42-vocab-quiz.html" title="4.2 Vocab Quiz">4.2 Vocab Quiz</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45528/42-true-or-false-quiz.html" title="4.2 True or False Quiz">4.2 True or False Quiz</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../43696/42-glossary-of-key-terms.html" title="4.2 Glossary of key terms">4.2 Glossary of key terms</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../44660/43-sales-forecasting-hl.html" title="4.3 Sales forecasting (HL)">4.3 Sales forecasting (HL)</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44669/benefits-limitations-of-sales-forecasting.html" title="Benefits & limitations of sales forecasting">Benefits & limitations of sales forecasting</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45530/43-true-or-false-quiz.html" title="4.3 True or False Quiz">4.3 True or False Quiz</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../43711/43-glossary-of-key-terms.html" title="4.3 Glossary of key terms">4.3 Glossary of key terms</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../44679/44-market-research.html" title="4.4 Market research">4.4 Market research</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44680/why-how-organizations-carry-out-market-research.html" title="Why & how organizations carry out market research">Why & how organizations carry out market research</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44692/methodstechniques-of-primary-market-research.html" title="Methods/techniques of primary market research">Methods/techniques of primary market research</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44693/methodstechniques-of-secondary-market-research.html" title="Methods/techniques of secondary market research">Methods/techniques of secondary market research</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44694/qualitative-quantitative-research.html" title="Qualitative & quantitative research">Qualitative & quantitative research</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44695/methods-of-sampling.html" title="Methods of sampling">Methods of sampling</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45531/44-true-or-false-quiz.html" title="4.4 True or False Quiz">4.4 True or False Quiz</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../43712/44-glossary-of-key-terms.html" title="4.4 Glossary of key terms">4.4 Glossary of key terms</a></li></ul><li class="ancestor parent" style="padding-left: 14px"><i class="expander fa fa-caret-right fa-rotate-90"></i><a class="" href="../44720/45-the-seven-ps-of-the-marketing-mix.html" title="4.5 The seven Ps of the marketing mix">4.5 The seven Ps of the marketing mix</a></li><ul class="level-2 expanded"><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44740/451-product.html" title="4.5.1 Product">4.5.1 Product</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../44741/the-product-life-cycle.html" title="The product life cycle">The product life cycle</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../44745/extension-strategies.html" title="Extension strategies">Extension strategies</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../44981/relationship-between-the-plc-investment-profit-cash-flow.html" title="Relationship between the PLC, investment, profit & cash flow">Relationship between the PLC, investment, profit & cash flow</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../44748/aspects-of-branding.html" title="Aspects of branding">Aspects of branding</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../44757/the-importance-of-branding.html" title="The importance of branding">The importance of branding</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../45766/starterplenary-activity-anagrams-quiz-brands.html" title="Starter/Plenary activity - Anagrams Quiz (Brands)">Starter/Plenary activity - Anagrams Quiz (Brands)</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../45957/starterplenary-activity-whats-in-a-brand-name.html" title="Starter/Plenary activity - What's in a (brand) name?">Starter/Plenary activity - What's in a (brand) name?</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../43713/45-glossary-of-key-terms-product.html" title="4.5 Glossary of key terms (Product)">4.5 Glossary of key terms (Product)</a></li></ul><li class="current parent" style="padding-left: 28px"><i class="expander fa fa-caret-right fa-rotate-90"></i><a class="" href="452-price.html" title="4.5.2 Price">4.5.2 Price</a></li><ul class="level-3 expanded"><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../43719/45-key-terms-price.html" title="4.5 Key Terms (Price)">4.5 Key Terms (Price)</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44782/453-promotion.html" title="4.5.3 Promotion">4.5.3 Promotion</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../44783/above-the-line-promotion.html" title="Above the line promotion">Above the line promotion</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../44795/below-the-line-promotion.html" title="Below the line promotion">Below the line promotion</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../44797/through-the-line-promotion.html" title="Through the line promotion">Through the line promotion</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../44801/social-media-marketing.html" title="Social media marketing">Social media marketing</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../43721/45-glossary-of-key-terms.html" title="4.5 Glossary of key terms">4.5 Glossary of key terms</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44803/454-place.html" title="4.5.4 Place">4.5.4 Place</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../44804/the-importance-of-different-distribution-channels.html" title="The importance of different distribution channels">The importance of different distribution channels</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../43722/45-glossary-of-key-terms.html" title="4.5 Glossary of key terms">4.5 Glossary of key terms</a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44758/455-people.html" title="4.5.5 People">4.5.5 People</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44773/456-processes.html" title="4.5.6 Processes">4.5.6 Processes</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44774/457-physical-evidence.html" title="4.5.7 Physical evidence">4.5.7 Physical evidence</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44982/appropriate-marketing-mixes.html" title="Appropriate marketing mixes">Appropriate marketing mixes</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../44697/46-international-marketing-hl.html" title="4.6 International marketing (HL)">4.6 International marketing (HL)</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44698/opportunities-threats-posed-by-entry-into-international-markets.html" title="Opportunities & threats posed by entry into international markets">Opportunities & threats posed by entry into international markets</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45537/46-true-or-false-quiz.html" title="4.6 True or False Quiz">4.6 True or False Quiz</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45736/46-glossary-of-key-terms.html" title="4.6 Glossary of key terms">4.6 Glossary of key terms</a></li></ul></ul><li class=" parent std-toplevel" style="padding-left: 4px"><i class="expander fa fa-caret-right "></i><a class="" href="../43565/unit-5-operations-mgt.html" title="Unit 5 - Operations Mgt">Unit 5 - Operations Mgt</a></li><ul class="level-1 "><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../44817/51-introduction-to-operations-management.html" title="5.1 Introduction to operations management">5.1 Introduction to operations management</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44818/the-role-of-operations-management.html" title="The role of operations management">The role of operations management</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../44812/52-operations-methods.html" title="5.2 Operations methods">5.2 Operations methods</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44815/operations-methods.html" title="Operations methods">Operations methods</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../44861/53-lean-production-quality-management-hl.html" title="5.3 Lean production & quality management (HL)">5.3 Lean production & quality management (HL)</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44864/features-of-lean-production.html" title="Features of lean production">Features of lean production</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44872/methods-of-lean-production.html" title="Methods of lean production">Methods of lean production</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44874/cradle-to-cradle-design-manufacturing.html" title="Cradle to cradle design & manufacturing">Cradle to cradle design & manufacturing</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44875/quality-control-quality-assurance.html" title="Quality control & quality assurance">Quality control & quality assurance</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44876/methods-of-managing-quality.html" title="Methods of managing quality">Methods of managing quality</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44877/the-impact-of-lean-production-tqm.html" title="The impact of lean production & TQM">The impact of lean production & TQM</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44878/national-international-quality-standards.html" title="National & international quality standards">National & international quality standards</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../44840/55-break-even-analysis.html" title="5.5 Break-even analysis">5.5 Break-even analysis</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44843/contribution.html" title="Contribution">Contribution</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44848/aspects-of-break-even-analysis.html" title="Aspects of break-even analysis">Aspects of break-even analysis</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44851/changes-in-price-and-costs.html" title="Changes in price and costs">Changes in price and costs</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44852/limitations-of-break-even-analysis.html" title="Limitations of break-even analysis">Limitations of break-even analysis</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../44890/56-production-planning-hl.html" title="5.6 Production planning (HL)">5.6 Production planning (HL)</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44902/the-local-global-supply-chain-process.html" title="The local & global supply chain process">The local & global supply chain process</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44922/the-difference-between-jit-jic.html" title="The difference between JIT & JIC">The difference between JIT & JIC</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44931/stock-control-charts.html" title="Stock control charts">Stock control charts</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44970/capacity-utilization-rate.html" title="Capacity utilization rate">Capacity utilization rate</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45125/defect-rate.html" title="Defect rate">Defect rate</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../43832/productivity.html" title="Productivity">Productivity</a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45187/cost-to-buy-cost-to-make.html" title="Cost to buy & Cost to make">Cost to buy & Cost to make</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../46353/sinterklaas-putting-ctb-vs-ctm-into-practice.html" title="Sinterklaas - Putting CTB vs CTM into practice">Sinterklaas - Putting CTB vs CTM into practice</a></li></ul></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../45242/57-crisis-management-contingency-planning-hl.html" title="5.7 Crisis management & contingency planning (HL)">5.7 Crisis management & contingency planning (HL)</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45243/difference-between-crisis-management-contingency-planning.html" title="Difference between crisis management & contingency planning">Difference between crisis management & contingency planning</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45268/impact-of-contingency-planning.html" title="Impact of contingency planning">Impact of contingency planning</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45260/factors-that-affect-effective-crisis-management.html" title="Factors that affect effective crisis management">Factors that affect effective crisis management</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45554/57-true-or-false-quiz.html" title="5.7 True or False Quiz">5.7 True or False Quiz</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../45669/59-management-information-systems-hl.html" title="5.9 Management Information Systems (HL)">5.9 Management Information Systems (HL)</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../42633/data-analytics.html" title="Data analytics">Data analytics</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45861/database.html" title="Database">Database</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44966/cybersecurity-and-cybercrime.html" title="Cybersecurity and cybercrime">Cybersecurity and cybercrime</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45859/critical-infrastructures.html" title="Critical infrastructures">Critical infrastructures</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../46175/virtual-reality.html" title="Virtual reality">Virtual reality</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45862/the-internet-of-things.html" title="The internet of things">The internet of things</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45858/artificial-intelligence.html" title="Artificial intelligence">Artificial intelligence</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../42634/big-data.html" title="Big data">Big data</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../43392/customer-loyalty-programmes.html" title="Customer loyalty programmes">Customer loyalty programmes</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../43395/digital-taylorism.html" title="Digital Taylorism">Digital Taylorism</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45671/data-mining.html" title="Data mining">Data mining</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45856/benefits-risks-ethical-implications-of-mis.html" title="Benefits, risks, & ethical implications of MIS">Benefits, risks, & ethical implications of MIS</a></li></ul></ul><li class=" parent std-toplevel" style="padding-left: 4px"><i class="expander fa fa-caret-right "></i><a class="" href="../42640/bmt-.html" title="BMT ">BMT </a></li><ul class="level-1 "><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../../task/399696.html" title="BMT 1 - SWOT analysis">BMT 1 - SWOT analysis</a></li><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../../task/399697.html" title="BMT 2 - Ansoff matrix">BMT 2 - Ansoff matrix</a></li><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../44027/bmt-3-steeple-analysis.html" title="BMT 3 - STEEPLE analysis">BMT 3 - STEEPLE analysis</a></li><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../42577/bmt-4-boston-consulting-group-matrix.html" title="BMT 4 - Boston Consulting Group matrix">BMT 4 - Boston Consulting Group matrix</a></li><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../42956/bmt-5-business-plans.html" title="BMT 5 - Business plans">BMT 5 - Business plans</a></li><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../43606/bmt-6-decision-trees.html" title="BMT 6 - Decision trees">BMT 6 - Decision trees</a></li><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../42362/bmt-7-descriptive-statistics.html" title="BMT 7 - Descriptive statistics">BMT 7 - Descriptive statistics</a></li><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../42226/bmt-8-circular-business-models.html" title="BMT 8 - Circular Business Models">BMT 8 - Circular Business Models</a></li><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../43605/bmt-9-gantt-chart-hl-only.html" title="BMT 9 - Gantt chart (HL only)">BMT 9 - Gantt chart (HL only)</a></li><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../42214/bmt-10-porters-generic-strategies-hl-only.html" title="BMT 10 - Porter's generic strategies (HL only)">BMT 10 - Porter's generic strategies (HL only)</a></li><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../42216/bmt-11-hofstedes-cultural-dimensions-hl-only.html" title="BMT 11 - Hofstede's cultural dimensions (HL only)">BMT 11 - Hofstede's cultural dimensions (HL only)</a></li><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../../task/399698.html" title="BMT 12 - Force field analysis (HL only)">BMT 12 - Force field analysis (HL only)</a></li><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../42375/bmt-13-critical-path-analysis-hl-only.html" title="BMT 13 - Critical path analysis (HL only)">BMT 13 - Critical path analysis (HL only)</a></li><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../42344/bmt-14-contribution-hl-only-.html" title="BMT 14 - Contribution (HL only) ">BMT 14 - Contribution (HL only) </a></li><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../42311/bmt-15-simple-linear-regression-hl-only.html" title="BMT 15 - Simple linear regression (HL only)">BMT 15 - Simple linear regression (HL only)</a></li></ul><li class=" parent std-toplevel" style="padding-left: 4px"><i class="expander fa fa-caret-right "></i><a class="" href="../42758/concepts.html" title="Concepts">Concepts</a></li><ul class="level-1 "><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../43633/creativity.html" title="Creativity">Creativity</a></li><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../43631/ethics.html" title="Ethics">Ethics</a></li><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../43435/sustainability.html" title="Sustainability">Sustainability</a></li><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../43668/change.html" title="Change">Change</a></li></ul><li class=" parent std-toplevel" style="padding-left: 4px"><i class="expander fa fa-caret-right "></i><a class="" href="../42836/ia-.html" title="IA ">IA </a></li><ul class="level-1 "><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../44415/formulating-suitable-ia-questions.html" title="Formulating suitable IA questions">Formulating suitable IA questions</a></li><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../47685/supporting-documents-for-the-ia.html" title="Supporting documents for the IA">Supporting documents for the IA</a></li><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../47840/top-tips-for-the-ia-primary-research.html" title="Top tips for the IA – Primary research">Top tips for the IA – Primary research</a></li><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../44047/50-sample-ia-research-questions.html" title="50+ Sample IA research questions">50+ Sample IA research questions</a></li><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../46719/recommended-format-for-the-ia.html" title="Recommended format for the IA">Recommended format for the IA</a></li></ul><li class=" parent std-toplevel" style="padding-left: 4px"><i class="expander fa fa-caret-right "></i><a class="" href="../43603/exams.html" title="Exams">Exams</a></li><ul class="level-1 "><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../44091/paper-1.html" title="Paper 1">Paper 1</a></li><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="Paper 2">Paper 2</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../46637/01-ikea.html" title="01 - IKEA">01 - IKEA</a></li></ul><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../45839/quantitative-techniques.html" title="Quantitative techniques">Quantitative techniques</a></li><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../46025/abbreviations-quiz.html" title="Abbreviations Quiz">Abbreviations Quiz</a></li><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../43740/command-terms.html" title="Command terms">Command terms</a></li><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../45612/glossary-of-key-terms.html" title="Glossary of key terms">Glossary of key terms</a></li></ul><li class=" parent std-toplevel" style="padding-left: 4px"><i class="expander fa fa-caret-right "></i><a class="" href="../33955/the-core.html" title="The Core">The Core</a></li><ul class="level-1 "><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../34902/cas-bm.html" title="CAS & BM">CAS & BM</a></li><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../21665/the-ee.html" title="The EE">The EE</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21934/the-bm-extended-essay.html" title="The BM Extended Essay">The BM Extended Essay</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../32857/ee-planning-form.html" title="EE Planning form">EE Planning form</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../37390/managing-the-ee-process.html" title="Managing the EE process">Managing the EE process</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../37496/top-10-tips-for-the-bm-ee.html" title="Top 10 tips for the BM EE">Top 10 tips for the BM EE</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21930/70-top-bm-ee-research-questions.html" title="70 top BM EE Research Questions">70 top BM EE Research Questions</a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../22196/tools-techniques-theories-for-the-ee.html" title="Tools, techniques & theories for the EE">Tools, techniques & theories for the EE</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../44048/the-triple-bottom-line.html" title="The triple bottom line">The triple bottom line</a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21836/understanding-the-assessment-criteria.html" title="Understanding the assessment criteria">Understanding the assessment criteria</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../37960/reflections-and-engagement-in-the-ee.html" title="Reflections and engagement in the EE">Reflections and engagement in the EE</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../41874/the-mandatory-reflection-sessions.html" title="The mandatory reflection sessions">The mandatory reflection sessions</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../37659/top-10-tips-for-completing-the-rppf.html" title="Top 10 Tips for completing the RPPF">Top 10 Tips for completing the RPPF</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21945/academic-integrity-the-ee.html" title="Academic Integrity & the EE">Academic Integrity & the EE</a></li><li class="" style="padding-left: 28px"><i 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<div id="main-column" class="span9"> <article id="452-price" style="margin-top: 16px;">
<h1 class="section-title">4.5.2 Price</h1>
<ul class="breadcrumb"><li><a title="Home" href="../../../businessmanagement.html"><i class="fa fa-home"></i></a><span class="divider">/</span></li><li><span class="gray">Unit 4 - Marketing</span><span class="divider">/</span></li><li><span class="gray">4.5 The seven Ps of the marketing mix</span><span class="divider">/</span></li><li><span class="active">4.5.2 Price</span></li></ul>
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<div class="panel panel-purple"><div class="panel-heading"><a class="expander pull-right" href="#"><span class="fa fa-plus"></span></a><div><p><strong>Unit 4.5 - The seven Ps of the marketing mix (2) - Price</strong></p></div></div><div class="panel-body"><p><img alt="" src="../../../ib/businessmanagement/images/4-marketing/prices.jpg" style="width: 280px; height: 186px;"></p><p><span style="color:#696969;"><em>"Why are beautiful products only made for a few buyers? It must be possible to offer good design and function at low prices."</em><br>- Ingvar Kamprad (1926 - 2018), Founder of IKEA</span></p><p><span style="color:#696969;"><em>"Price is what you pay. Value is what you get."</em><br>- Warren Buffett (b. 1930), US business magnate, investor, and philanthropist</span></p><hr class="hidden"><p><span style="font-family:arial,helvetica,sans-serif;"><strong>Price</strong> refers to the value of a good or service that is paid by the customer. Price will usually cover the costs of production, allowing the business to earn profit.</span></p><p>Large supermarket chains (such as Walmart, Carrefour, and Tesco) use an extensive range of pricing and non-pricing strategies to compete with each other. Market research published by <em>Which? </em>(a consumer campaigning organization in the UK) showed that most shoppers believe large supermarkets deliberately try to mislead their customers by using a range of confusing pricing strategies. The <em>Which?</em> findings showed that supermarkets often use incomprehensible labelling and puzzling prices for their products. For example, without using a calculator, do you think a 600g jar of mayonnaise priced at $3.49 is better value than a 400g jar of the same branded product but priced at $2.35? Which product offers better value? Similarly, pre-packed fruits and vegetables often have very different prices compared to loose varieties of the same produce.</p><section class="tib-hiddenbox"><p><span style="color:#FF0000;">At first glance, customers might assume that the larger 600g jar of mayonnaise offers better value for money. At $3.49, this equates to $0.58 per gram. The smaller 400g jar is priced at $2.35, so this works out to be $0.58 per gram too! So, there is no actual saving (per gram) for customers that choose the larger jar of mayonnaise(!)</span></p></section><p>The syllabus requires students to understand the appropriateness of the following nine pricing methods (AO3):</p><div class="row-fluid"><div class="span6 col-left"><div><p>1. Cost-plus (mark-up)</p><p>2. Penetration</p><p>3. Loss leader</p><p>4. Predatory</p><p>5. Premium pricing</p></div></div><div class="span6"><div><p>6. Dynamic pricing (HL only)</p><p>7. Competitive pricing (HL only)</p><p>8. Contribution pricing (HL only)</p><p>9. Price elasticity of demand (HL only) </p></div></div></div><section class="tib-teacher-only" readonly="true" title="This box is not visible to students"><div class="header" readonly="true"><img class="icon" src="../../../thinkib/icons/teacher-only.svg"> Teacher only box</div><div class="content" readonly="false"><p><span style="color:#FF0000;">Please note the following important changes to the new syllabus (first exams 2024). In the previous guide, there were eight pricing strategies specified, taught to AO3, for both SL and HL. In the new guide, there are nine pricing methods; five of these are taught to SL students whilst there are an additional four pricing methods for HL candidates.</span></p><p><span style="color:#FF0000;"><strong><em>What's been removed?</em></strong></span></p><p><span style="color:#FF0000;">The following pricing methods (formerly referred to as "pricing strategies") have been removed from the new syllabus:</span></p><ul><li><p><span style="color:#FF0000;">Skimming (or price skimming)</span></p></li><li><p><span style="color:#FF0000;">Psychological pricing</span></p></li></ul><ul><li><p><span style="color:#FF0000;">Price discrimination</span></p></li><li><p><span style="color:#FF0000;">Price leadership</span><span style="color:#FF0000;"></span></p></li></ul><p><span style="color:#FF0000;">Please be aware of the above as these terms will appear in some of the past exam papers and mark schemes that you might use with students during their two-year course.</span></p><hr><p><span style="color:#FF0000;"><strong><em>What's been added?</em></strong></span></p><p><span style="color:#FF0000;">The following pricing methods are new to the course, so previous resources for the course (such as older editions of textbooks or more recent exam papers) will not include these:</span></p><ul><li><p><span style="color:#FF0000;">Premium pricing</span></p></li><li><p><span style="color:#FF0000;">Dynamic pricing (HL only)</span></p></li><li><p><span style="color:#FF0000;">Competitive pricing (HL only)</span></p></li></ul><ul><li><p><span style="color:#FF0000;">Contribution pricing (HL only)</span></p></li><li><p><span style="color:#FF0000;">Price elasticity of demand (PED) (HL only)*</span></p></li></ul><p><span style="color:#FF0000;"></span><span style="color:#FF0000;">* Note that students are not expected to calculate PED as the learning outcome for all the pricing strategies are an AO3 (not AO3 plus AO4).</span></p><p><span style="color:#FF0000;"></span></p><hr class="hidden"><p><span style="color:#FF0000;"></span></p><p><span style="color:#FF0000;"><em><strong>What's been kept the same?</strong></em></span><span style="color:#FF0000;"></span></p><p><span style="color:#FF0000;">Finally, the following pricing methods taught in the previous syllabus which remain in the new syllabus are:</span></p><ul><li><p><span style="color:#FF0000;">Cost-plus (mark-up) pricing</span></p></li><li><p><span style="color:#FF0000;">Penetration pricing</span></p></li></ul><ul><li><p><span style="color:#FF0000;">Loss leader pricing</span></p></li><li><p><span style="color:#FF0000;">Predatory pricing</span></p></li></ul><hr><p><span style="color:#FF0000;">So, this means there are now nine pricing methods in the new syllabus (there were eight in the previous course).</span></p><ul class="branded"><li><p><span style="color:#FF0000;">SL students needs to learn 5 pricing methods: cost-plus (mark-up) pricing, penetration pricing, loss leader pricing, predatory pricing, and premium pricing.</span></p></li><li><p><span style="color:#FF0000;">There are four additional pricing methods that HL students need to learn: dynamic pricing, competitive pricing, contribution pricing, and price elasticity of demand (PED).</span></p></li></ul><hr class="hidden"><p><span style="color:#FF0000;">Finally, please note the term "pricing strategies" has been replaced with "pricing methods". Please stick to the new terminology so as to prevent students from being overly confused. Also, be aware of this change if/when using past exam papers and mark schemes.</span></p></div></section><div class="yellowBg"><h5><span style="color:#FF0000;"><span style="font-family:arial,helvetica,sans-serif;"><span class="snippet-fa fa fa-lightbulb-o fa-lg" style="color: rgb(61, 30, 128);"> </span> Top tip!</span></span></h5><p>Exam questions often ask candidates to suggest and justify suitable pricing strategies that can be used by a business in different scenarios, such as entering new markets. Rather than simply explaining the eight types of pricing methods that can be used, it is more important to put these into the context of the organization. For example, it might be appropriate to consider a few factors first, before advising on a suitable pricing strategy. These considerations may include the following points:</p><ul class="branded"><li><p>Although the market might be ‘new’ for the business in question, there might be well-established competitors that already exist in the market, so penetration pricing could be used. However, premium pricing might be appropriate if the firm is the first entrant to a market.</p></li><li><p>Unless the product is original and innovative, customers will already have perceptions about what the correct level of prices ought to be.</p></li><li><p>Which pricing strategy is most likely to appeal to customers? For some goods and services, price discrimination is highly suitable whilst loss leader pricing works better for other products.</p></li><li><p>What sort of image does the business wish to portray? Clearly, the pricing strategy used for high quality and exclusive products will be different from that used for mass market products with plenty of substitutes.</p></li><li><p>Finally, it is important to consider the likely reaction of competitors to the pricing strategies used by a business. If low prices are used and this sparks off a price war, then most businesses will tend to lose out in the long term.</p></li></ul></div><div class="yellowBg"><h5><span style="font-family:arial,helvetica,sans-serif;"><span style="color:#FF0000;"><span class="snippet-fa fa fa-linode fa-lg" style="color: rgb(103, 7, 124);"> </span> ATL Activity (Thinking skills) - Price within the marketing mix</span></span></h5><p><span style="font-family:arial,helvetica,sans-serif;">Choose a product that you might be interesting in selling. Then watch this 9-minute introductory video and consider the importance of the various pricing methods in the marketing mix for the product of your choice. Be prepared to share your findings.</span></p><p><span style="font-family:arial,helvetica,sans-serif;"></span></p><p><span style="color:#696969;"><em>Note:</em> as with any video you might find online, please make sure the contents align with the official IB syllabus, e.g., price skimming is not in the IB guide although penetration pricing is.</span></p></div><div class="yellowBg"><h5><span style="color:#FF0000;"><span style="font-family:arial,helvetica,sans-serif;"><span class="snippet-fa fa fa-lightbulb-o fa-lg" style="color: rgb(103, 7, 124);"> </span> Exam tip!</span></span></h5><p><img alt="" height="177" src="../../../ib/businessmanagement/images/coffee.jpg" width="280"></p><p>It is not always straightforward to categorise pricing methods, and the nine stated in the syllabus are certainly not the only pricing strategies that exist. Take the real-world example used by British multinational sandwich and coffee franchise chain Pret A Manger outlined below:</p><ul class="branded"><li><p>Subscription model of £25 ($33) per month, allowing customers to have up to 5 Barista-made drinks per day, such as coffees, teas, frappes, and hot chocolates. That means drinks are priced as low as just 16.7 pence (22 cents) per drink.</p></li><li><p>There must be at least 30 minutes between redemptions (so customers cannot redeem two drinks at the same time, for example).</p></li><li><p>Subscribers can cancel at any time (there is no tie-in period).</p></li></ul><p>Hence, when it is not clearly obvious what pricing method is used by a business, it is important to justify your answers and lines of reasoning.</p></div><div class="yellowBg"><h5><span style="color:#FF0000;"><span style="font-family:arial,helvetica,sans-serif;"><span class="snippet-fa fa fa-cogs fa-lg" style="color: rgb(61, 30, 128);"> </span> Theory of Knowledge (TOK) - What is the price of Art?</span></span></h5><p>What is the value of a product? How do we know what the true value of art is? And how do we know the true value or price of a piece of art?</p><p>Consider some of these examples from the commercial world of art:</p><ul class="branded"><li><p>May 2004 - Pablo Picasso's 1905 <em>Garçon à la pipe</em> (Boy with a Pipe) was sold for $104m.</p></li><li><p>January 2010 - Alberto Giacometti's 1961 <em>L’Homme qui Marche </em>(Walking Man) sold for $104m.</p></li><li><p>April 2010 - Pablo Picasso's 1932 <em>Nude, Green Leaves and Bust</em> sold for $106m.</p></li><li><p>November 2012 - Claude Monet’s 1905 <em>Water Lilies</em> painting sold for $43.7m in New York.</p></li><li><p>May 2012 - Edvard Munch’s 1893 <em>The Scream</em> sold for $120m.</p></li><li><p>November 2015 - Cy Twombly's <em>Untitled (New York City) </em>sold for $70.5 million (take a look at the artwork <a href="https://www.sothebys.com/en/auctions/ecatalogue/2015/contemporary-art-evening-auction-n09420/lot.18.html">here</a>).</p></li><li><p>But perhaps the most prominent case of recent times was in December 2019, when Italian artist Maurizio Cattelan’s <em>Comedian</em>, consisting of only a banana duct-taped to a wall, sold for a <strong>$120,000</strong>! Cattelan said he purchased the banana at a local market for just $0.30!</p></li></ul><p><img alt="" src="../../../ib/businessmanagement/images/bananaart.jpg" style="width: 300px; height: 201px;"></p><p><span class="snippet-fa fa fa-question-circle-o fa-lg" style="color: rgb(103, 7, 124);"> </span> How do consumers/customers/users of a good or service actually "know" whether the price they pay is of value for money?</p></div></div><div class="panel-footer"><div></div></div></div><div class="panel panel-purple panel-expandable"><div class="panel-heading"><a class="expander pull-right" href="#"><span class="fa fa-plus"></span></a><div><p><strong><span style="font-family:arial,helvetica,sans-serif;">1. Cost-plus (mark-up) pricing (AO3)</span></strong></p></div></div><div class="panel-body"><div><p><strong>Cost-plus pricing</strong> (or <strong>mark-up pricing</strong>) adds a profit margin to the costs of production in order to determine the selling price of a good or service. This ensures that each unit sold adds contribution (see Unit 5.5) by ensuring the selling price is higher than the production costs. The difference between the price and the cost is called the mark-up (or the profit margin), which is usually expressed as a percentage figure, such as 50% above the cost per unit.</p><p>For example, if a toy costs $10 per unit to make and the firm wanted to earn a 80% profit margin, then the selling price would be: $10 × 1.8 = $18.</p><p>The mark-up can also be expressed in absolute terms, such as $7.50 contribution per unit above the average cost of output. This would mean the toy would be priced at: $10 + $7.50 = $17.50.</p><p><strong><span style="font-family:arial,helvetica,sans-serif;"></span></strong><span class="snippet-fa fa fa-check-circle-o fa-lg" style="color: rgb(61, 30, 128);"> </span> <strong><span style="font-family:arial,helvetica,sans-serif;">Advantages of cost-plus pricing</span></strong></p><ul class="branded"><li><p><span style="font-family:arial,helvetica,sans-serif;">It is simple to understand and calculate.</span></p></li><li><p><span style="font-family:arial,helvetica,sans-serif;">It makes sure the selling price is above the average total cost of production, thus ensuring each sale earns a positive contribution.</span></p></li><li><p><span style="font-family:arial,helvetica,sans-serif;">It is suitable for almost all goods and services.</span></p></li><li><p>It is particularly important and relevant in markets when raw material costs are rising.</p></li><li><p>It is also a valid pricing strategy if customers are prepared to pay a high price for specialist/unique products, in order to maximize profit.</p></li></ul><hr class="hidden"><p><strong><span style="font-family:arial,helvetica,sans-serif;"></span></strong><span class="snippet-fa fa fa-times-circle-o fa-lg" style="color: rgb(61, 30, 128);"> </span> <strong><span style="font-family:arial,helvetica,sans-serif;">Disadvantages of cost-plus pricing</span></strong></p><ul class="branded"><li><p><span style="font-family:arial,helvetica,sans-serif;">It ignores prices being charged by competitors, including those that charge a much lower price.</span></p></li><li><p>It can give firms very few incentives to reduce costs.</p></li><li><p><span style="font-family:arial,helvetica,sans-serif;">It does not directly consider the needs of customers when the price is set.</span></p></li><li><p><span style="font-family:arial,helvetica,sans-serif;">Rather than focusing on the possible level of demand for a firm’s products, it concentrates on calculating the price instead.</span></p></li></ul><div class="yellowBg"><h5><span style="font-family:arial,helvetica,sans-serif;"><span style="color:#FF0000;"><span class="snippet-fa fa fa-pencil-square-o fa-lg" style="color: rgb(103, 7, 124);"> </span> Exam Practice Question 1 - Santa Clarita Toy Co.</span></span></h5><table border="1" cellpadding="0" cellspacing="0"><tbody><tr><td style="width:28px;"><p>(a)</p></td><td style="width:497px;"><p><em>Santa Clarita Toy Co.</em> makes toy trolleys. The cost of producing one unit is $15. The company uses a mark-up of 90%. Calculate its selling price for the product.</p></td><td style="width:89px;"><p align="center"><em>[2 marks]</em></p></td></tr><tr><td style="width:28px;"><p>(b)</p></td><td style="width:497px;"><p><em>Santa Clarita Toy Co.</em> sells a cheaper toy for $1.98 for which its production costs of $1.20. Calculate the percentage profit margin (mark-up) on this toy.</p></td><td style="width:89px;"><p align="center"><em>[2 marks]</em></p></td></tr></tbody></table> <section class="tib-teacher-only" readonly="true" title="This box is not visible to students"><p class="header" readonly="true"><img class="icon" src="../../../thinkib/icons/teacher-only.svg"> Teacher only box</p><div class="content" readonly="false"><p><strong><span style="font-family:arial,helvetica,sans-serif;"><span style="color:#FF0000;">Answers</span></span></strong></p><p><strong><span style="font-family:arial,helvetica,sans-serif;">(a) <em>Santa Clarita Toy Co. </em>makes toy trolleys. The cost of producing one unit is $15. The company uses a mark-up of 90%. Calculate its selling price for the product. <em>[2 marks]</em></span></strong></p><p><span style="font-family:arial,helvetica,sans-serif;"><span style="color:#FF0000;"><em>Santa Clarita Toy Co. </em>adds 90% on top of its production costs of each toy trolley to ensure each unit earns a mark-up (contributing towards its profit). Hence, the selling price is:</span></span></p><p><span style="font-family:arial,helvetica,sans-serif;"><span style="color:#FF0000;">$15 × 1.9 = <strong>$28.50</strong></span></span></p><p><span style="font-family:arial,helvetica,sans-serif;"><span style="color:#FF0000;">Award <em>[1 mark] </em>for the working out and <em>[1 mark]</em> for the correct answer.</span></span></p><hr class="hidden"><p><strong>(b) <em>Santa Clarita Toy Co. </em>sells a cheaper toy for $1.98 for which its production costs of $1.20. Calculate the percentage profit margin (mark-up) on this toy.<span style="font-family:arial,helvetica,sans-serif;"> <em>[2 marks]</em></span></strong></p><p><span style="font-family:arial,helvetica,sans-serif;"><span style="color:#FF0000;">$1.98 = $1.2<em>x</em></span></span></p><p><span style="font-family:arial,helvetica,sans-serif;"><span style="color:#FF0000;"><em>x</em> = $1.98 ÷ $1.2 = 65%</span></span></p><p><span style="font-family:arial,helvetica,sans-serif;"><span style="color:#FF0000;">or</span></span></p><p><span style="font-family:arial,helvetica,sans-serif;"><span style="color:#FF0000;">[($1.98 - $1.2) ÷ $1.2] × 100 = 65%</span></span></p><p><span style="font-family:arial,helvetica,sans-serif;"><span style="color:#FF0000;">Award <em>[1 mark]</em> for the working out and <em>[1 mar</em>k<em>]</em> for the correct answer.</span></span></p></div></section></div></div></div><div class="panel-footer"><div></div></div></div><div class="panel panel-purple panel-expandable"><div class="panel-heading"><a class="expander pull-right" href="#"><span class="fa fa-plus"></span></a><div><p><strong><span style="font-family:arial,helvetica,sans-serif;">2. Penetration pricing (AO3)</span></strong></p></div></div><div class="panel-body"><div><p><span style="font-family:arial,helvetica,sans-serif;"><strong>Penetration pricing</strong> is setting a low price in order to enter an industry. It allows the firm to compete against existing firms and to gain market share. Quite often, penetration pricing takes the form of a heavily advertised discounted price offer in order to attract a large number of customers in a short space of time. The low price can also allow the firm create brand awareness and brand recognition. As the firm establishes itself and gains brand recognition, the price can be raised.</span></p><p><span style="font-family:arial,helvetica,sans-serif;"><span class="snippet-fa fa fa-check-circle-o fa-lg" style="color: rgb(61, 30, 128);"> </span> <strong>Advantages of penetration pricing</strong></span></p><ul class="branded"><li><p><span style="font-family:arial,helvetica,sans-serif;">Allows a business to enter a market and/or to launch a new product into an existing market, acquiring brand recognition rapidly.</span></p></li><li><p><span style="font-family:arial,helvetica,sans-serif;">It can discourage other firms from entering the industry due to the low prices and low profit margins.</span></p></li><li><p><span style="font-family:arial,helvetica,sans-serif;">Lower prices can give the business a price advantage over its competitors, thus leading to high sales and gaining market share.</span></p></li><li><p><span style="font-family:arial,helvetica,sans-serif;">Lower prices can also encourage word of mouth promotion, thus leading to even higher sales volume.</span></p></li><li><p><span style="font-family:arial,helvetica,sans-serif;">Low prices (and hence lower profit margins) can force businesses to concentrate on improved cost control and higher levels of productivity.</span></p></li></ul><hr class="hidden"><p><span style="font-family:arial,helvetica,sans-serif;"><span class="snippet-fa fa fa-times-circle-o fa-lg" style="color: rgb(61, 30, 128);"> </span> <strong>Disadvantages of penetration pricing</strong></span></p><ul class="branded"><li><p><span style="font-family:arial,helvetica,sans-serif;">Penetration pricing is not a sustainable (long-term) pricing strategy as low prices can lead to losses or very low profit margins.</span></p></li><li><p><span style="font-family:arial,helvetica,sans-serif;">If costs rise suddenly due to external factors, the business could find the low prices are no longer a profitable option.</span></p></li><li><p><span style="font-family:arial,helvetica,sans-serif;">Low prices can backfire as customers associate the organization and its products as being of ‘cheap’ or low quality<span style="font-family:arial,helvetica,sans-serif;"> (inferior)</span>. This will make it difficult for the business to raise prices at a later date.</span></p></li></ul><div class="yellowBg"><h5><span style="color:#FF0000;"><span style="font-family:arial,helvetica,sans-serif;"><span class="snippet-fa fa fa-pencil-square-o fa-lg" style="color: rgb(103, 7, 124);"> </span> Exam Practice Question 2</span></span></h5><p>Explain why firms might choose to use penetration pricing. <em>[4 marks]</em></p><section class="tib-teacher-only" readonly="true" title="This box is not visible to students"><p class="header" readonly="true"><img class="icon" src="../../../thinkib/icons/teacher-only.svg"> Teacher only box</p><div class="content" readonly="false"><p><span style="color:#FF0000;"><strong>Answer</strong></span></p><p><span style="color:#FF0000;">Penetration pricing is used to help establish a new product in the industry by setting a relatively low price (such as a special introductory price for a product launch) in order to gain brand recognition and market share. It is used by firms entering a market that has established competitors. As the business and its brand(s) become recognised and accepted over time, the price can then be raised.</span></p><p><span style="color:#FF0000;">Award <em>[1 - 2 marks] </em>for an answer that shows some understanding of the demands of the question, although the response is unclear or undeveloped.</span></p><p><span style="color:#FF0000;">Award <em>[3 - 4 marks] </em>for an answer that shows good understanding of the demands of the question, with appropriate and effective use of business management terminology throughout the answer, similar to the example above.</span></p></div></section></div></div></div><div class="panel-footer"><div></div></div></div><div class="panel panel-purple panel-expandable"><div class="panel-heading"><a class="expander pull-right" href="#"><span class="fa fa-plus"></span></a><div><p><strong>3. Loss leader pricing (AO3)</strong></p></div></div><div class="panel-body"><div><p><span style="font-family:arial,helvetica,sans-serif;"><strong>Loss leader pricing</strong> consist of pricing a product below its cost of production so as to attract customers to also purchase other items (with their higher profit margins) at the same time. For example, a grocery store might reduce the price of a particular product from $2.99 to just $0.99 in order to attract customers to buy other products too.</span></p><p><span style="font-family:arial,helvetica,sans-serif;">Of course, some customers might go into the store to only buy multiple quantities of the loss leader product. So, in order to preserve its finances, the business usually imposes a maximum limit on how many units of the loss leader per visit. Loss leaders are not sustainable in the long run so are often offered for a limited time period only.</span></p><p>Loss leader pricing is often used to encourage customers to purchase the target product (the loss leader product) along with complementary products sold at higher, more profitable prices. An example is hand-held shavers being sold relatively cheaply, but selling the razor blades at a price with signficantly higher profit margins.</p><p><span style="font-family:arial,helvetica,sans-serif;"><img alt="" height="249" src="../../../ib/businessmanagement/images/supermarket.jpg" width="384"></span></p><p><span style="color:#696969;"><span style="font-family:arial,helvetica,sans-serif;"><em>Supermarket operators are experts at using loss leader pricing</em></span></span></p><p>Another industry that uses loss leader pricing is the games console market. Producers such as Sony, Microsoft, and Nintendo fo not earn profit from the actual games consoles. These are often sold at a large loss, but the intention is to earn profit from the subsequent sales of games, game pass subscriptions, in-app purchases, and accessories (such as hardware products, pro controllers, and collectables). The loss leader (the physical games console) is used by the games console makers to get customers onto their platform and services. This pricing method has been used by games console manufacturers for decades. For example, back in 2006, at the time of launch of the Sony PS3 , each device was sold at a loss of around $240 per console.</p><p><span style="font-family:arial,helvetica,sans-serif;">Perhaps the best real-world example of a loss leader is Costco’s hotdog meal, which has been used as a loss leader by the American multinational corporation since the 1980s. Costco's pizzas are an another example, outselling most pizza chains throughout the USA.</span></p><p><img alt="" src="../../../ib/businessmanagement/images/businesses/costco2.jpg" style="width: 300px; height: 400px;"></p><p><span style="color:#696969;"><em>Costco has used loss-leader pricing since the 1980s</em></span></p><hr class="hidden"><p><span style="font-family:arial,helvetica,sans-serif;"><span class="snippet-fa fa fa-check-circle-o fa-lg" style="color: rgb(61, 30, 128);"> </span> <strong>Advantages of loss leader pricing</strong></span></p><ul class="branded"><li><p><span style="font-family:arial,helvetica,sans-serif;">Loss leaders can help a business to attract customers as most people tend to like getting a bargain.</span></p></li><li><p><span style="font-family:arial,helvetica,sans-serif;">The business can benefit from higher sales revenue from customers who buy other products in addition to the loss leader.</span></p></li><li><p><span style="font-family:arial,helvetica,sans-serif;">Loss leader pricing can be used by businesses as a quick and effective way to clear out older stock or merchandise.</span></p></li><li><p>Loss leading is a common method used by businesses to enter or penetrate a market.</p></li><li><p><span style="font-family:arial,helvetica,sans-serif;">Some firms use loss leaders as a brand switching strategy, i.e. the low price attracts customers away from rival brands.</span></p></li></ul><hr class="hidden"><p><span style="font-family:arial,helvetica,sans-serif;"><span class="snippet-fa fa fa-times-circle-o fa-lg" style="color: rgb(61, 30, 128);"> </span> <strong>Disadvantages of loss leader pricing</strong></span></p><ul class="branded"><li><p><span style="font-family:arial,helvetica,sans-serif;">Customers may get used to and expect the business to continue offering loss leader products. This can be expensive for the business to sustain.</span></p></li><li><p><span style="font-family:arial,helvetica,sans-serif;">The business makes a loss on using this pricing method (hence its name), yet there is no guarantee that customers will buy other products with positive profit margins.</span></p></li><li><p><span style="font-family:arial,helvetica,sans-serif;">The business must have enough inventory of the loss leader product otherwise it will cause customer dissatisfaction. However, stockpiling can be expensive and harm the organization’s liquidity position.</span></p></li><li><p><span style="font-family:arial,helvetica,sans-serif;">Loss leader pricing can be anti-competitive and deemed to be unethical. It is often regarded as a controversial pricing method in the same way as predatory pricing.</span></p></li></ul><div class="yellowBg"><h5><span style="color:#FF0000;"><span style="font-family:arial,helvetica,sans-serif;"><span class="snippet-fa fa fa-file-text-o fa-lg" style="color: rgb(61, 30, 128);"> </span> Case Study 1 - Ethics and loss leader pricing</span></span></h5><p>Anti-competitive supermarket pricing strategies are considered to be both unethical and illegal in many countries. Large supermarket chains such as Walmart, Carrefour and, Tesco use an extensive range of pricing and non-pricing strategies to compete with one another. Market research published by <em>Which? </em>magazine showed that most customers believe large supermarkets deliberately try to mislead them by using confusing pricing strategies and loss leaders.</p><p>The <em>Which?</em> magazine findings showed that supermarkets often use poor labelling and baffling prices for their products. An example given was that a 600 gram jar of mayonnaise is priced at $3.49 whilst a 400 gram jar of the same brand was priced at $2.35 in the same supermarket. So, which one offers customers better value for their money?</p><p>Similarly, the investigation found that pre-packed fruits and vegetables often have very different prices compared to loose varieties of the same produce. Pressure groups have called for more open and transparent laws about the pricing strategies used by retailers, which are perceived to confuse or mislead customers.</p><section class="tib-hiddenbox"><ul class="branded"><li><p><span style="color:#FF0000;">The 600 gram jar of mayonnaise priced at $3.49 = $0.00581667 per gram</span></p></li><li><p><span style="color:#FF0000;">The 400 gram jar of the same brand of mayonnaise priced at $2.35 = $0.005875 per gram</span></p></li></ul><p><span style="color:#FF0000;">So, the 600 gram jar offers only slightly better value for money even though the customer would need to spend more money in absolute terms. Customers often make the assumption that purchasing the (50%) larger product should be better value for money.</span></p><p><span style="color:#FF0000;">But it is unrealistic for (most) customers to be able to work this out quickly, whilst shopping in a supermarket - certainly not without a calculator anyway!</span></p></section></div><div class="yellowBg"><h5><span style="color:#FF0000;"><span style="font-family:arial,helvetica,sans-serif;"><span class="snippet-fa fa fa-file-text-o fa-lg" style="color: rgb(61, 30, 128);"> </span> Case Study 2 - Loss leader pricing at Walmart</span></span></h5><p>Walmart is the largest retailer in the world. The American supermarket operator, along with all major supermarket chains, often uses loss-leader pricing.</p><p><span class="snippet-fa fa fa-youtube fa-lg" style="color: rgb(202, 72, 26);"> </span> Watch this short video clip (How is Walmart making money by pricing below cost?), and answer the questions that follow.</p><ol><li><p>What type of products does Walmart use as loss leaders?</p></li><li><p>Why can Walmart afford to sell loss leader products?</p></li><li><p>What other examples of loss leader products are provided in the video?</p></li></ol><section class="tib-teacher-only" readonly="true" title="This box is not visible to students"><p class="header" readonly="true"><img class="icon" src="../../../thinkib/icons/teacher-only.svg"> Teacher only box</p><div class="content" readonly="false"><p><span style="color:#FF0000;"><strong>Answers</strong></span></p><ol><li><p><span style="color:#FF0000;"></span>What type of products does Walmart use as loss leaders?<br><span style="color:#FF0000;">Basic grocery items, such as fresh milk and eggs.</span></p><hr class="hidden"><p><span style="color:#FF0000;"></span></p></li><li><p><span style="color:#FF0000;"></span>Why can Walmart afford to sell loss leader products?<br><span style="color:#FF0000;">The size of Walmart and its business operations allow the company to sell some prducts at a loss (using loss leader pricing) <span class="style-scope yt-formatted-string" dir="auto">in order to attract more customers. Th</span>e sheer number of customers mean that Walmart enjoys huge volumes of sales of other goods that are profitable, which more than covers the deficit from loss leader products.</span></p><hr class="hidden"><p><span style="color:#FF0000;"></span></p></li><li><p>What other examples of loss leader products are provided in the video?<span style="color:#FF0000;"><br>Grocery stores such as Whole Foods (which has been acquired by Amazon) often sell loss leader products. Other examples include Gillette razors and accessories for expensive televisions.</span></p></li></ol></div></section></div></div></div><div class="panel-footer"><div></div></div></div><div class="panel panel-purple panel-expandable"><div class="panel-heading"><a class="expander pull-right" href="#"><span class="fa fa-plus"></span></a><div><p><strong><span style="font-family:arial,helvetica,sans-serif;">4. Predatory pricing (AO3)</span></strong></p></div></div><div class="panel-body"><div><p><span style="font-family:arial,helvetica,sans-serif;"><strong>Predatory pricing</strong> is a <span style="font-family:arial,helvetica,sans-serif;">pricing method </span>that involves charging a low price, sometimes even below the cost, so as to damage the sales of rivals. It is also used by established market leaders to restrict new entrants, thereby limiting competition.</span></p><p><span style="font-family:arial,helvetica,sans-serif;">It can be a risky strategy to use as many governments impose anti-competitive laws, so firms can be fined for using predatory pricing with the intent to restrict competition. In some cases, predatory pricing can lead to a <strong>price war</strong>, whereby existing firms repeatedly cut prices in an attempt to destroy the sales of their rivals. <span style="font-family:arial,helvetica,sans-serif;">This can be good for consumers, at least in the short term, as they benefit from lower prices. However, <span style="font-family:arial,helvetica,sans-serif;">price wars are unsustainable in the long term. Q</span></span>uite often, price wars will result in some (smaller) firms leaving the industry as there is mounting pressure to reduce costs.</span></p><p><span style="font-family:arial,helvetica,sans-serif;"><img alt="" height="180" src="../../../ib/businessmanagement/images/supermarket-2.jpg" width="332"><br><span style="color:#696969;"><em>Supermarkets often using predatory pricing strategies</em></span></span></p><p><span style="font-family:arial,helvetica,sans-serif;"><span class="snippet-fa fa fa-check-circle-o fa-lg" style="color: rgb(61, 30, 128);"> </span> <strong>Advantages of predatory pricing</strong></span></p><ul class="branded"><li><p><span style="font-family:arial,helvetica,sans-serif;">Low prices tempt customers to buy more of the product and for non-customers to switch to buying the product (ditching the rival product in the process).</span></p></li><li><p><span style="font-family:arial,helvetica,sans-serif;">Low prices can be a barrier to entry, preventing potential rivals from competing in the industry.</span></p></li><li><p><span style="font-family:arial,helvetica,sans-serif;">A dominant firm that uses predatory pricing can inflict losses on its rivals that cannot compete by continually reducing prices.</span></p></li></ul><p><span style="font-family:arial,helvetica,sans-serif;"><span class="snippet-fa fa fa-times-circle-o fa-lg" style="color: rgb(61, 30, 128);"> </span> <strong>Disadvantages of predatory pricing</strong></span></p><ul class="branded"><li><p><span style="font-family:arial,helvetica,sans-serif;">Predatory pricing is anti-competitive, so is illegal in many countries and violates competition laws. For example, in the European Union (EU), it is illegal for a business to sell its products at a loss in order to eliminate competition.</span></p></li><li><p><span style="font-family:arial,helvetica,sans-serif;">Lower prices can cause some customers to question or doubt the quality of the product.</span></p></li><li><p><span style="font-family:arial,helvetica,sans-serif;">Predatory pricing is likely to cause rival firms to retaliate by reducing their own prices. This can therefore lead to a price war, with no obvious winner in the long term.</span></p></li><li><p><span style="font-family:arial,helvetica,sans-serif;">It is not a sustainable pricing strategy as firms cannot afford to keep reducing prices.</span></p></li></ul><div class="yellowBg"><h5><span style="font-family:arial,helvetica,sans-serif;"><span style="color:#FF0000;"><span class="snippet-fa fa fa-linode fa-lg" style="color: rgb(103, 7, 124);"> </span> ATL Activity (Thinking skills) - </span><span style="color:#FF0000;">Primark</span></span></h5><p><img alt="" src="../../../ib/businessmanagement/images/4-marketing/clothes.jpg" style="width: 300px; height: 180px;"></p><p><span style="font-family:arial,helvetica,sans-serif;">Read</span><span style="font-family:arial,helvetica,sans-serif;"> the article <a href="https://www.liverpoolecho.co.uk/whats-on/shopping/six-key-reasons-primark-manages-16340387">here</a> about how British clothes retailer Primark is able to keep its prices so low. What pricing strategies are used by the retailer, and do these fit neatly into the categories (of pricing strategies) outlined in the syllabus?</span></p></div></div></div><div class="panel-footer"><div></div></div></div><div class="panel panel-purple panel-expandable"><div class="panel-heading"><a class="expander pull-right" href="#"><span class="fa fa-plus"></span></a><div><p><strong>5. Premium pricing</strong></p></div></div><div class="panel-body"><div><p><img alt="" height="135" src="../../../ib/businessmanagement/ferrari.png" width="300"></p><p><strong>Premium pricing </strong>involves a business permanently setting a high price for its products because of the associated image, reputation, or status associated with its high-quality products. For example, Apple and Ferrari use premium pricing (their products are generally more expensive than those from similar competitors). Example include:</p><ul class="branded"><li><p>Premium economy air travel (more expensive than an economy class ticket but with premium add-ons such as extra leg room and baggage allowance).</p></li><li><p>Tailor-made clothing - Tailors will charge premium prices for bespoke products, such as shirts, suits, wedding dresses, and shoes, due to the uniqueness of the items and to create an impression of luxury and better quality.</p></li><li><p>Organic produce and drinks - An organic version of a fruit, vegetable, or coffee will have a premium price than regular versions of these products as consumer may feel that the higher price means they are getting a better product.</p></li></ul><p>Premium pricing is also used in the case of ostentatious consumption and conspicuous consumption.</p><ol><li><p><em>Ostentatious consumption</em> is the purchase of expensive products which impress and make customers feel good about themselves. A large part of the satisfaction comes from knowing the premium price paid for the product. Examples include Christian Dior perfumes, Rolex watches, Chanel handbags, Armani suits, and Vera Wang wedding dresses. Demand would fall if the price falls since the prestige and exclusivity associated with such premium products are reduced.</p></li><li><p><em>Conspicuous consumption</em> is the lavish spending of some (very rich) customers for the purpose of upholding their social status, rather than to serve their real needs. The term was coined by 19th Century American economist Thorstein Veblen. Examples include highly expensive luxury cars (such as Rolls Royce, Bentley, and Maybach) and collector items (such as original paintings from Picasso and Van Gogh). For example, Paul Newman’s <em>Rolex Daytona </em>was sold for a record $17.8 million (October 2017). There is often a grey area between conspicuous consumption and ostentatious consumption, but the latter includes customers who are not necessarily on very high income levels.</p></li></ol><div class="yellowBg"><h5><span style="font-family:arial,helvetica,sans-serif;"><span style="color:#FF0000;"><span class="snippet-fa fa fa-file-text-o fa-lg" style="color: rgb(61, 30, 128);"> </span> Case Study 3 - Prices through the roof!</span></span></h5><p><img alt="" src="../../../ib/businessmanagement/images/4-marketing/koenigsegg_jesko_absolut_2021.jpg" style="width: 300px; height: 152px;"></p><ul class="branded"><li><p>The world’s fastest car, the Koenigsegg Jesko Absolut (with 1,600 horsepower and an official top speed of 330 mph or 531 km/h) has a price tag of $2.8 million, before taxes are applied!</p></li><li><p>The most expensive can of Coca-Cola, created especially for astronauts, is priced at around $1,250 per can!</p></li><li><p>The most expensive Barbie doll, with its very own one-carat pink diamond, sold in 2010 for a record price of $302,500!</p></li><li><p>The world’s most expensive BBQ is the 24K gold-plated BeefEater Barbecue, and for that privilege you have to pay $165,000!</p></li><li><p>The world’s most expensive dessert, priced at at $25,000, is a chocolate sundae sold with a golden spoon for customers to enjoy flakes of edible gold! Customers can keep the spoon which is made by luxury jeweller Euphoria New York.</p></li><li><p>In 2018, a skyscraper penthouse apartment at the Tour Odéon Monaco (The Odéon Tower) was sold for a world record $387 million!</p></li></ul></div><div class="yellowBg"><h5><span style="color:#FF0000;"><span style="font-family:arial,helvetica,sans-serif;"><span class="snippet-fa fa fa-youtube fa-lg" style="color: rgb(167, 38, 38);"> </span> ATL Activity (Thinking skills) - Video review</span></span></h5><p>The price of bluefin tuna - why is it so expensive? Watch this short video clip and answer the questions that follow.</p><ol><li><p>In 2013, how much did a 489 pound (221.8 kg) bluefin tuna sell for?</p></li><li><p>How much did Wilcox estimate one piece of Otoro (the fattiest portion of the tuna, found on the very underside of the fish) would cost if imported from Japan?</p></li><li><p>What is the price range per pound for a local bluefin tuna on the east coast?</p></li><li><p>Peak season Oma tuna in Japan may cost around how much per pound?</p></li><li><p>How much did the first fish of 2018 sell for, at auction?</p></li><li><p>What is the most valuable part of the bluefin tuna fish, as a result of it being highly desirable?</p></li></ol><section class="tib-teacher-only" readonly="true" title="This box is not visible to students"><p class="header" readonly="true"><img class="icon" src="../../../thinkib/icons/teacher-only.svg"> Teacher only box</p><div class="content" readonly="false"><p><span style="color:#FF0000;"><strong>Answers</strong></span></p><p>(timings are shown for reference only)</p><ol><li><p>0:05 In 2013, how much did a 489 pound (221.8 kg) bluefin tuna sell for?<br><span style="color:#FF0000;">$1.8 million</span></p></li><li><p>0:39 How much did Wilcox estimate one piece of Otoro (the fattiest portion of the tuna, found on the very underside of the fish) would cost if imported from Japan?<br><span style="color:#FF0000;">$80</span></p></li><li><p>1:40 What is the price range per pound for a local bluefin tuna on the east coast?<br><span style="color:#FF0000;">Only $20 - $40 per pound (0.45 kg)</span></p></li><li><p>2:06 Peak season Oma tuna in Japan may cost around how much per pound?<br><span style="color:#FF0000;">Between $400 to $450</span></p></li><li><p>3:36 How much did the first fish of 2018 sell for at auction?<br><span style="color:#FF0000;">$323,000 (that's about the same as two brand new Porsche 911 Turbo high performance sports cars)</span></p></li><li><p>4:23 What is the most valuable part of the bluefin tuna fish, as a result of it being highly desirable?<br><span style="color:#FF0000;">The fillet (a boneless prime cut or slice of fish)</span></p></li></ol></div></section></div></div></div><div class="panel-footer"><div></div></div></div><div class="panel panel-purple panel-expandable"><div class="panel-heading"><a class="expander pull-right" href="#"><span class="fa fa-plus"></span></a><div><p><strong>6. Dynamic pricing (HL only)</strong></p></div></div><div class="panel-body"><div><p><strong>Dynamic pricing</strong> is a pricing method that strives to determine the optimum price at different periods of time. Prices are based on the ability and willingness of customers to pay at a specific time for a good or service. Dynamic pricing (often referred to as <strong>surge pricing</strong> or <strong>time-based pricing</strong>) is flexible and based on real-time data. Hence, this pricing method involves the use of flexible prices to reflect changing market conditions.</p><p>For example, all major airlines use dynamic pricing to set ticket prices. When customers try to book a seat on a flight, the price might depend on numerous factors, such as:</p><ul class="branded"><li><p>how many seats are left on that particular flight (the price tends to increase with fewer available seats)</p></li><li><p>whether customers want extra leg room or an exit seat</p></li><li><p>how far in advance customers book their flight (the earlier customers book, the cheaper the price tends to be).</p></li></ul><p><img alt="" height="130" src="../../../ib/businessmanagement/images/airline.png" width="300"></p><p><em><span style="color:#696969;">Airline companies are experts at dynamic pricing</span></em></p><p>Other examples of businesses or markets that use dynamic pricing include:</p><ul class="branded"><li><p>Car park operators - In some car parks, such as those at international airports, drivers who arrive during off-peak periods are charged a lower price per hour, whereas those who park their vehicles during peak times (when demand is less price sensitive) and the car park is full, the price per hour rises.</p></li><li><p>Delivery (courier) companies, such as DHL, FedEx or TNT, will charge extra for same-day delivery.</p></li><li><p>Airbnb uses dynamic pricing to fill vacant rooms and accommodation with prices based on demand at the time.</p></li><li><p>Hotels charges higher prices during weekends and peak seasons, such as during school holidays in the summer. By contrast, they offer discounts to guests during off-peak periods.</p></li><li><p>Spectator sorting events, such as football (soccer), baseball, basketball, and tennis - The price of tickets to these events/competitions will depend of several factors, including who the opponents are, the aay of the week, recent team or individual performance, and even the weather.</p></li><li><p>Utilities suppliers (providers of gas, water, and electricity) charge customers more per unit of consumption during peak hours of the day.</p></li></ul><p>In reality, the dynamic price changes are automated (based on computer software, data, and the use of mathematical formulae or algorithms) in order to adjust pricing accordingly. For example, some businesses will offer "early bird" discounts for customers who confirm train, movie, airline, or restaurant bookings in advance.</p><p><span class="snippet-fa fa fa-check-circle-o fa-lg" style="color: rgb(61, 30, 128);"> </span> <strong>Advantages of dynamic pricing</strong></p><ul class="branded"><li><p>Businesses that use dynamic (surge) pricing can increase sales revenue by capturing the willingness of customers to pay more during peak periods.</p></li><li><p>Without dynamic pricing, it may be harder to incentivize business to supply their services, such as trying to catch a taxi during off-peak times when taxi drivers are less willing to work.</p></li><li><p>Dynamic pricing enables customers to avoid queues (caused by excess demand) and surpluses (caused by excess supply).</p></li></ul><hr class="hidden"><span class="snippet-fa fa fa-times-circle-o fa-lg" style="color: rgb(61, 30, 128);"> </span> <strong>Disadvantages of dynamic pricing</strong><ul class="branded"><li><p>Consumers who are charged higher prices may feel disgruntled (ripped off or cheated).</p></li><li><p>Surge pricing is often associated with being unethical as it is perceived to exploit customers, such as pharmaceutical companies charging higher prices during a major pandemic.</p></li><li><p>It can be time consuming for customers to have to spend time finding the best deals/prices.</p></li><li><p>There is also the potentially high cost to the business of monitoring and evaluating the data needed for dynamic pricing.</p></li></ul><p><span class="snippet-fa fa fa-youtube fa-lg" style="color: rgb(202, 72, 26);"> </span> Watch this short video which explains how Uber uses dynamic (surge) pricing:</p><div class="yellowBg"><h5><span class="snippet-fa fa fa-pencil-square-o fa-lg" style="color: rgb(103, 7, 124);"> </span> <span style="color:#FF0000;"><span style="font-family:arial,helvetica,sans-serif;">Exam Practice Question 3</span></span></h5><p>Explain why airline tickets are more expensive during the holiday season, such as during summer periods. <em>[4 marks]</em></p><section class="tib-teacher-only" readonly="true" title="This box is not visible to students"><p class="header" readonly="true"><img class="icon" src="../../../thinkib/icons/teacher-only.svg"> Teacher only box</p><div class="content" readonly="false"><p><span style="color:#FF0000;"><strong>Answer</strong></span></p><p><span style="color:#FF0000;">This is an example of dynamic pricing being used by the airline companies. Possible reasons could include an explanation of:</span></p><ul class="branded"><li><p><span style="color:#FF0000;">Different consumer groups (market segments) have a different price elasticity of demand (PED) for airline travel. Airline companies can charge lower prices to consumer groups who are more responsive to changes in price (such as those who have retired), and charge higher prices to consumers who are less responsive to changes in price (such as adults or families travelling during peak periods).</span></p></li><li><p><span style="color:#FF0000;">Many families with young children have to wait until the school holidays to travel. These customers have few alternative periods where they can travel so are less price sensitive to higher prices charged by the airlines during peak travel times of the year.</span></p></li><li><p><span style="color:#FF0000;">Airline companies face higher demand for their services, so can increase prices during holiday periods. Likewise, they reduce prices during off-peak periods as customers are more price sensitive during these periods of the year.</span></p></li><li><p><span style="color:#FF0000;"><em>Accept any other valid explanation of dynamic pricing used by airline companies.</em></span></p></li></ul><p><span style="color:#FF0000;">Award <em>[1 - 2 marks] </em>for an answer that shows some understanding of the demands of the question, although the explanation lacks depth or clarity in areas.</span></p><p><span style="color:#FF0000;">Award <em>[3 - 4 marks] </em>for an answer that shows good understanding of the demands of the question, with clear application to the airline industry and appropriate and effective use of terminology throughout the response.</span></p></div></section></div></div></div><div class="panel-footer"><div></div></div></div><div class="panel panel-purple panel-expandable"><div class="panel-heading"><a class="expander pull-right" href="#"><span class="fa fa-plus"></span></a><div><p><strong>7. Competitive pricing (HL only)</strong></p></div></div><div class="panel-body"><div><p><strong>Competitive pricing </strong>(often called <strong>competition-based pricing</strong>) is a pricing method where businesses set their prices based on what rivals are charging. Hence, competitive pricing is one of the simplest pricing methods available to businesses. It is suitable in highly competitive markets where products are homogeneous or have very similar attributes and functions.</p><p><img alt="" src="../../../ib/businessmanagement/images/4-marketing/mobile-phones.jpg" style="width: 280px; height: 150px;"></p><p><span style="color:#696969;"><em>Mobile phones are often competitively priced</em></span></p><h5><span style="font-family:arial,helvetica,sans-serif;"><span class="snippet-fa fa fa-check-circle-o fa-lg" style="color: rgb(61, 30, 128);"> </span> Advantages of competitive pricing</span></h5><ul class="branded"><li><p>It is a low risk pricing strategy as the possibility of making a mistake with pricing is minimised. This is because competitive pricing helps to ensure a firm's prices are not too high or too low from the average price being charged in the market.</p></li><li><p>It is one of the simplest pricing methods, especially for new and small businesses. This methods simply requires the business to determine who their main competitors are and collect the prices charged by these firms before making a final pricing decision.</p></li><li><p>There is flexibility as the business can make changes to prices to accommodate changes in the industry.</p></li></ul><hr class="hidden"><h5><span style="font-family:arial,helvetica,sans-serif;"><span class="snippet-fa fa fa-times-circle-o fa-lg" style="color: rgb(61, 30, 128);"> </span> Disadvantages of competitive pricing</span></h5><ul class="branded"><li><p>It is difficult to stand out in a highly competitive market if prices are similar to those of rivals. The business will therefore have to compete on non-price factors, such as improved advertising, branding, packaging, and improved customer loyalty schemes - all of which can be rather expensive.</p></li><li><p>The task of collecting and comparing price data from competitors can be time consuming and expensive, especially for smaller businesses. This could include the cost of purchasing price monitoring software.</p></li></ul><div class="greenBg"><h5><span style="color:#FF0000;"><span style="font-family:arial,helvetica,sans-serif;"><span class="snippet-fa fa fa-briefcase fa-lg" style="color: rgb(61, 30, 128);"> </span> Business Management Toolkit</span></span></h5><p>Discuss how knowledge of <a href="../42214/bmt-10-porters-generic-strategies-hl.html" title="New syllabus 2022 » Business Management Toolkit (BMT) » BMT 10 - Porter's generic strategies (HL)">Porter's generic strategies</a> (HL only) can help businesses to be more competitive in terms of their pricing methods.</p></div></div></div><div class="panel-footer"><div></div></div></div><div class="panel panel-purple panel-expandable"><div class="panel-heading"><a class="expander pull-right" href="#"><span class="fa fa-plus"></span></a><div><p><strong>8. Contribution pricing (HL only)</strong></p></div></div><div class="panel-body"><div><p><strong>Contribution pricing</strong> is a pricing method that involves setting the price greater than the per unit variable costs of production to ensure that a positive contribution is made towards the firm's fixed costs. For example, if a firm has variable costs per unit of $5 and a selling price of $9, then each unit sold earns a contribution of $4 towards the payment of fixed costs.</p><p>Knowledge of contribution can enable businesses to make more informed decisions about prices. For example, suppose a hot dog retailer has unit variable costs of $4 and fixed costs of $600 per week. This means that if the selling price is $10 per hotdog:</p><ul class="branded"><li><p>Unit contribution = $10 <span style="font-size:11.0pt;font-family:"Arial",sans-serif;
mso-fareast-font-family:Calibri;mso-fareast-theme-font:minor-latin;mso-bidi-font-family:
"Times New Roman";mso-bidi-theme-font:minor-bidi;mso-ansi-language:EN-GB;
mso-fareast-language:EN-US;mso-bidi-language:AR-SA">– </span> $4 = $6</p></li><li><p>Break-even = Fixed costs / Unit contribution = $600 / $6 = 100 units (hotdogs).</p></li></ul><p>If the selling price is $12, then the following applies:</p><ul class="branded"><li><p>Unit contribution = $12 <span style="font-size:11.0pt;font-family:"Arial",sans-serif;
mso-fareast-font-family:Calibri;mso-fareast-theme-font:minor-latin;mso-bidi-font-family:
"Times New Roman";mso-bidi-theme-font:minor-bidi;mso-ansi-language:EN-GB;
mso-fareast-language:EN-US;mso-bidi-language:AR-SA">– </span> $4 = $8</p></li><li><p>Break-even = Fixed costs / Unit contribution = $600 / $8 = 75 units (hotdogs).</p></li></ul><p>It can be seen that a higher contribution per unit leads to a quicker break-even. In the above case, by raising the price by 20%, the firm can break even at a much lower number of hotdogs. However, a higher price could mean fewer customers, so knowledge of price elasticity of demand (see section below) can be beneficial prior to determining which price to set.</p><p>In any case, a firm must have a positive contribution to have any chance of earning a profit, i.e., the selling price must exceed the variable cost per unit. Only once sufficient units of the product are sold can the total contribution cover the fixed costs. Thereafter, further sales will generate a profit for the business.</p><p>Contribution pricing can be used by businesses to decide whether to accept special or additional orders. For example, a hotel with vacancies (empty rooms) or a flight with spare capacity (empty seats) can be sold at a discounted price, so long as there is a positive contribution (price exceeds variable unit cost). This is because the additional order contributes to the firm's fixed costs.</p><div class="yellowBg"><h5><span style="color:#FF0000;"><span style="font-family:arial,helvetica,sans-serif;"><span class="snippet-fa fa fa-lightbulb-o fa-lg" style="color: rgb(61, 30, 128);"> </span> Top tip!</span></span></h5><p>To gain a better understanding of contribution, refer to <a href="../44840/55-break-even-analysis.html" title="Unit 5 - Operations Mgt » 5.5 Break-even analysis">Unit 5.5 break-even analysis</a> and <a href="../42344/bmt-14-contribution-hl-only-.html" title="BMT » BMT 14 - Contribution (HL only) ">contribution analysis</a> (as part of the Business Management Toolkit).</p></div><h5><span style="font-family:arial,helvetica,sans-serif;"><span class="snippet-fa fa fa-check-circle-o fa-lg" style="color: rgb(61, 30, 128);"> </span> Advantages of contribution pricing</span></h5><ul class="branded"><li><p>Contribution pricing and contribution analysis enables managers to determine which products from the firm’s product portfolio generates the highest (and the least) amount of total contribution. In general, products with the highest total contribution are prioritised as these contribute the most towards paying the firm's fixed costs. Products that contribute the least amount or have a negative total contribution may need to be discontinued.</p></li><li><p>It is straightforward to calculate, so long as managers can establish the variable cost per unit, fixed costs, and a selling price.</p></li><li><p>Contribution pricing enables managers to know how much profit the business will earn on each unit sold after the firm has reached its break-even level of sales.</p></li><li><p>It is a useful pricing method for when deciding on the price to charge customers for a special or additional order.</p></li></ul><hr class="hidden"><h5><span style="font-family:arial,helvetica,sans-serif;"><span class="snippet-fa fa fa-times-circle-o fa-lg" style="color: rgb(61, 30, 128);"> </span> Disadvantages of contribution pricing</span></h5><ul class="branded"><li><p>Contribution pricing and contribution analysis assume that the selling price of a product is constant, but in reality customers are often given a price discount for larger orders (purchasing economies of scale).</p></li><li><p>Despite what might appear to be an ideal price based on contribution analysis, it is still important for a buisness to check the prices being charged by its closets competitors in the market. Not doing so could simply reduce the firm's competitiveness in the market.</p></li><li><p>Allocating fixed costs appropriately between the many products sold by a large business can prove to be extremely difficult, so this would lead to inaccurate prices being set.</p></li><li><p>Contribution pricing and contribution analysis assume that manufacturers produce <em>and </em>sell exactly the same number of units. However, in reality, producers often make more than they can sell, and there are often spoilages (damage) to stocks (inventories) which can therefore not be sold to customers.</p></li></ul><div class="yellowBg"><h5><span style="font-family:arial,helvetica,sans-serif;"><span class="snippet-fa fa fa-pencil-square-o fa-lg" style="color: rgb(103, 7, 124);"> </span> <span style="color:#FF0000;">Exam Practice Question 4</span></span></h5><p>Distinguish between<em> cost-plus pricing</em> and <em>contribution pricing</em>. <em>[4 marks]</em></p><section class="tib-teacher-only" readonly="true" title="This box is not visible to students"><div class="header" readonly="true"><img class="icon" src="../../../thinkib/icons/teacher-only.svg"> Teacher only box</div><div class="content" readonly="false"><p><strong>Answer</strong></p><p><span style="color:#FF0000;">Contribution pricing focuses on the contribution margin, i.e., the difference between the selling price and variable costs per unit or P – AVC. It emphasizes on maximizing the contribution per unit in order to cover fixed costs and generate profits.</span></p><p><span style="color:#FF0000;">In contrast, cost-plus pricing considers both variable and fixed costs, adding a percentage mark-up to determine the selling price, i.e. cost-plus pricing = average total cost + desired profit per unit. It ensures all costs are covered and includes a pre-determined profit margin.</span></p><p><span style="color:#FF0000;">Essentially, cost-plus pricing is set according to the total cost of production of a good or service whereas contribution pricing is set according only to the variable cost per unit.</span></p><p><span style="color:#FF0000;">Award <em>[1 - 2 marks]</em> for an answer that shows limited understanding of the demands of the question.</span></p><p><span style="color:#FF0000;">Award<em> [3 - 4 marks]</em> for an answer that shows good understanding of the demands of the question, with a clear distinction made between contribution pricing and cost-plus pricing.</span></p></div></section></div></div></div><div class="panel-footer"><div></div></div></div><div class="panel panel-purple panel-expandable"><div class="panel-heading"><a class="expander pull-right" href="#"><span class="fa fa-plus"></span></a><div><p><strong><span style="font-family:arial,helvetica,sans-serif;">9. Price elasticity of demand (HL only)</span></strong></p></div></div><div class="panel-body"><div><p><strong>Price elasticity of demand</strong> (PED) measures the extent to which the demand for a product changes due to a change in its price. For example, the demand for fresh flowers during Valentine’s Day and Mothers’ Day is less price-sensitive than during off-peak periods. Hence, florists know they are able to charge higher prices during these times of the year.</p><div><p><img alt="" src="../../../ib/businessmanagement/images/florist.jpg" style="width: 300px; height: 200px;"></p><p><span style="color:#696969;"><em>Customers are less price-sensitive when buying fresh flowers on special occasions</em></span></p><p>Knowledge of PED is not only about being able to set higher prices to customers who can afford to pay. Statistically, restaurants and cinemas throughout the world face their quietest trading day of the week on a Tuesday, which is why many of these businesses offer discounted prices to diners and cinema-goers on Tuesdays.</p><p>If a change in the price of a good or service causes a relatively small change in the quantity demanded, then the demand for the product is <strong>price inelastic</strong>. This means that consumers are not highly responsive to changes in the price of the good or service. For example, if the price of a staple food product goes up, it is unlikely to have a significant impact on the demand for the product which is deemed to be an essential for many individuals and households.</p><p>By contrast, demand for a good or service is <strong>price elastic</strong> if there is a relatively large change in the quantity demanded due to a change in its price. This means that consumers are highly responsive to changes in the price, perhaps because there are plenty of readily available substitute products in the market. For example, a increase in the price of Sprite is likely to cause a larger than proportionate increase in the demand for 7-Up. This is because consumers of Sprite are now more willing to switch to buying the relatively cheaper and readily available rival brand of 7-Up drinks.</p><p><span style="color:#FF0000;"><em>Note: there is no explicit mention of the factors affecting PED in the syllabus, but the additional reading here may help students to consolidate their understanding. This could also be of use to some students for their Extended Essay (if pricing methods feature in the EE).</em></span></p><p><span style="color:#FF0000;"><em>Also note that it is not a requirement for Business Management students to <u>calculate</u> PED values, as the learning outcomes for this section of the syllabus do not include AO4 (subject specific skills, such as calculations). However, to gain a better understanding of how PED is calculated and what the figures mean, please click the icon below.</em></span></p><section class="tib-hiddenbox"><h5><span style="font-family:arial,helvetica,sans-serif;">Calculating the price elasticity of demand (PED)</span></h5><p>To measure the degree of responsiveness of changes in the demand for a good or service following a change in its price, the following formula is used.</p><p><img alt="" height="89" src="../../../ib/businessmanagement/images/4-marketing/ped-formula.jpg" width="350"></p><hr class="hidden"><p>When calculating the value of PED, it is vital to remember to calculate the percentage change in price and quantity demanded, rather than the absolute change. To calculate percentage changes in figures, use the following formula:</p><p><img alt="" src="../../../ib/businessmanagement/images/4-marketing/percentage-change-formula.jpg" style="width: 350px; height: 54px;"></p><hr class="hidden"><p>For example, suppose that a convenience store owner raises the price of a popular snack from $5 to $5.50 and notices that this causes the quantity demanded to fall from 400 units per week to 380. To determine whether this decision caused a relatively large or small impact on demand, it is necessary to apply the PED formula. The PED for this popular snack is calculated as:</p><ul class="branded"><li><p>Percentage change in quantity demanded = [(400 – 380) / 400] × 100 = 5%</p></li><li><p>Percentage change in price = [(5.50 – 5 / 5.50)] × 100 = 10%</p></li><li><p>PED = 5/10 = <strong>0.5</strong></p></li></ul><p>As the value of the percentage change in price is greater than the resulting percentage in quantity demanded, it can be said that demand is price inelastic. This is because the 10% change in price only causes a 5% change in the demand for the popular snack.</p><p>If a change in the market price of a good or service causes a relatively small change in the quantity demanded, then the demand for the product is <strong>price inelastic</strong>. This means that consumers are not highly responsive to changes in the price of the good or service. For example, if the price of a staple food product goes up, it is unlikely to have a significant impact on the demand for the product which is deemed to be an essential for many individuals and households.</p><p>Examples of price inelastic products includes the following:</p><div class="row-fluid"><div class="span6 col-left"><div><ul class="branded"><li><p>Broadband internet</p></li><li><p>EpiPen</p></li><li><p>Higher education</p></li><li><p>Insulin</p></li><li><p>Motor insurance</p></li><li><p>Peak-time travel</p></li><li><p>Petrol</p></li></ul></div></div><div class="span6"><div><ul class="branded"><li><p>Prescription drugs (medicines)</p></li><li><p>Safety matches</p></li><li><p>Salt</p></li><li><p>Staple food products, e.g., milk, rice, bread, and potatoes</p></li><li><p>Tobacco products</p></li><li><p>Utilities, e.g., gas, electricity, and water</p></li></ul></div></div></div><p>By contrast, demand for a good or service is <strong>price elastic</strong> if there is a relatively large change in the quantity demanded due to a change in its market price. This means that consumers are highly responsive to changes in the market price, perhaps because there are plenty of readily available substitute products in the market. For example, a increase in the price of Pepsi is likely to cause a larger than proportionate increase in the demand for Coca-Cola. This is because consumers of Pepsi are now more willing to switch to buying the relatively cheaper and readily available rival brand of Coca-Cola drinks.</p><p><img alt="" src="../../../ib/businessmanagement/images/businesses/coke-pepsi.jpg" style="width: 300px; height: 262px;"></p><p><span style="color:#696969;"><em>Pepsi and Coca-Cola are substitute products</em></span></p><p>Examples of price elastic products includes the following:</p><div class="row-fluid"><div class="span6 col-left"><div><ul class="branded"><li><p>Air travel for leisure</p></li><li><p>Carbonated soft drinks</p></li><li><p>Consumer electronics</p></li><li><p>Designer clothes</p></li><li><p>Fast fashion</p></li><li><p>Fast food products, e.g., burgers, pizzas, and fried chicken</p></li></ul></div></div><div class="span6"><div><ul class="branded"><li><p>Restaurant meals</p></li><li><p>Second-hand books</p></li><li><p>Sports cars</p></li><li><p>Theatre tickets</p></li><li><p>Used cars</p></li><li><p>Vacations during off-peak periods</p></li></ul></div></div></div><div class="yellowBg"><h5><span style="font-family:arial,helvetica,sans-serif;"> <span style="color:#FF0000;"><span class="snippet-fa fa fa-file-text-o fa-lg" style="color: rgb(61, 30, 128);"> </span> Case Study 1 - Unilever Ice Creams</span></span></h5><p>In 2023, Unilever announced that its range of ice cream products had increased by an average price of 11.5%, which resulted in demand falling by 5.2% as measured by the volume of ice creams sold.</p><p>This means that the PED for Unilever ice creams was:</p><ul class="branded"><li><p>PED = %ΔQ<sub>D</sub> / %ΔP</p></li><li><p>%Q<sub>D </sub>= -5.2</p></li><li><p>%ΔP = +11.5</p></li><li><p>PED = -5.2 / 11.5 = <strong>0.45</strong> to 2 d.p.</p></li></ul><p>This means that the demand for Unilever's ice creams was price inelastic.</p><p>Unilever's ice cream brands include Ben & Jerry's, Calippo, Cornetto, Darko, Magnum, Popsicle, and Wall's.</p><p>Source: adapted by <a href="https://www.bbc.com/news/business-66299138">BBC News</a> and <a href="https://www.unilever.com/brands/ice-cream/">Unilever</a></p></div></section><hr class="hidden"><h5><span style="font-family:arial,helvetica,sans-serif;">Factors that affect the value of PED</span></h5><ul class="branded"><li><p><strong>Substitution </strong>- This is the key determinant of price elasticity. In general, the greater the number and availability of substitutes there are for a product, the greater its PED will be. Examples of products with relatively price inelastic demand include: petrol, private education, and medicines.</p></li><li><p><strong>Income </strong>- The proportion of income spent on a product also affects the value of its PED. If the price of a box of household matches were to double, it would discourage very few buyers because the actual change in price is a tiny proportion of their overall income. However, if the price of a motorcycle were to rise by 50% from $10,000 to $15,000, this would have a huge impact on quantity demanded; even though the percentage increase in the price of motorcycles is much lower than that of household matches. Therefore, the greater the proportion of income that the price represents, the higher the value of PED tends to be. On an individual level, those on high levels of income are less sensitive to changes in price than people with low incomes.</p></li><li><p><strong>Time </strong>- The period of time affects the value of PED since people’s habits and traditions, which have been established over a long period of time, may be slow to change. With time, people can adjust to any permanent price changes and may seek alternatives if prices are increased. Parents with children in private education are unlikely to withdraw their offsprings from school as this could be very disruptive to their learning. Drivers of motor vehicles are unlikely to immediately get rid of their vehicles simply because of fuel price hikes. Given time however, both parents and drivers may seek alternatives. Hence, the shorter the time period in question, the less price elastic demand tends to be.</p></li><li><p><strong>Durability </strong>- Perishable products may need to be replaced, even if prices have risen. However, if the price of a consumer durable is on the rise, customers may try to make their existing possessions last a little longer. Items such as furniture, mobile phones, and motor vehicles can all be upgraded at a later date. Hence, in general, the more durable a product is, the greater its PED tends to be.</p></li><li><p><strong>Fashion, Addictions, Habits, and Tastes</strong> - Where a product is habit forming (such as tobacco) or highly fashionable, the PED tends to be low, i.e. relatively price inelastic. People who are seriously devoted to a hobby (be it sports, music or otherwise) are willing to spend a huge amount of money, so are less sensitive to changes in price.</p></li><li><p><strong>Necessity </strong>- The degree of necessity or urgency also affects PED. Products that are seen as ‘essential’ (such as fuel and food) tend to be relatively price inelastic because people need these products so will continue to purchase them even if prices rise. The demand for business-class air travel is less responsive to changes in price than the demand for economy-class air travel. Demand for textbooks and stationery is less price-sensitive for students and their parents than the demand for the cinema or Uber taxi rides.</p></li></ul><p>Knowledge of PED also enables producers to gain from <strong>dynamic pricing</strong>. This occurs when firms are able to charge different prices for essentially the same good or service because of differences in PED. For example, cinemas and theatres charge adults a higher price than children for essentially the same service. Airlines and amusement parks charge higher prices (surge pricing) during peak travel periods.</p><div class="yellowBg"><h5><span style="color:#FF0000;"><span style="font-family:arial,helvetica,sans-serif;"><span class="snippet-fa fa fa-file-text-o fa-lg" style="color: rgb(61, 30, 128);"> </span> Case Study 2 - Nestlé</span></span></h5><p>Read this <a href="https://www.bbc.co.uk/news/business-65385139">BBC article</a> about Nestlé raising the prices of its products by almost 10% (due to rising costs of production) but still saw sales revenue rise in the first three months of 2023. This is PED in action - Nestle's10% increase in prices lead to an extra 5.6% increase in the company's sales revenue.</p><p>Nestlé is the world's biggest food firm. Its brands include the following:</p><div class="row-fluid"><div class="span6 col-left"><div><ul class="branded"><li><p>Aero</p></li><li><p>Cheerios</p></li><li><p>Coffee Mate</p></li><li><p>Dreyer’s</p></li><li><p>Gerber</p></li><li><p>Häagen-Dazs</p></li><li><p>Kit Kat</p></li><li><p>Maggi</p></li><li><p>Milkybar</p></li></ul></div></div><div class="span6"><div><ul class="branded"><li><p>Milo</p></li><li><p>Mövenpick</p></li><li><p>Nescafé</p></li><li><p>Nespresso</p></li><li><p>Nestea</p></li><li><p>Nestquik</p></li><li><p>Perrier</p></li><li><p>Smarties</p></li><li><p>Vittel</p></li></ul></div></div></div></div><div class="yellowBg"><h5><span class="snippet-fa fa fa-pencil-square-o fa-lg" style="color: rgb(103, 7, 124);"> </span> <span style="color:#FF0000;"><span style="font-family:arial,helvetica,sans-serif;">Exam Practice Question 5 - Tokyo Shibaura Electric Co.</span></span></h5><p>Tokyo Shibaura Electric Co. is one of the world’s largest manufacturers of flash memory chips used in smartphones and other electronic devices. Last year, the company announced that its profits increased by almost 76% despite a fall in the price of flash memory chips by around 60%. Prices of flash memory chips are expected to fall even further as global competition intensifies from producers such as Samsung Group, Sony Corporation, Intel, and Fujitsu.</p><table border="0" cellpadding="0" cellspacing="0"><tbody><tr><td style="width:47px;"><p>(a) </p></td><td style="width:510px;"><p>Define the term<em> price elasticity of demand</em> (PED).</p></td><td style="width:85px;"><p align="right"><em>[2 marks]</em></p></td></tr><tr><td style="width:47px;"><p>(b) </p></td><td style="width:510px;"><p>Comment on the price elasticity of demand (PED) for Tokyo Shibaura Electric Co.'s flash memory chips.</p></td><td style="width:85px;"><p align="right"><em>[2 marks]</em></p></td></tr><tr><td style="width:47px;"><p>(c)</p></td><td style="width:510px;"><p>Examine whether knowledge of price elasticity of demand (PED) is useful for firms, such as Tokyo Shibaura Electric Co., that face intense competition.</p></td><td style="width: 85px; text-align: right;"><p><em>[6 marks]</em></p></td></tr></tbody></table><section class="tib-teacher-only" readonly="true" title="This box is not visible to students"><p class="header" readonly="true"><img class="icon" src="../../../thinkib/icons/teacher-only.svg"> Teacher only box</p><div class="content" readonly="false"><p><span style="color:#FF0000;"><strong>Answers</strong></span></p><p><strong>(a) Define the term <em>price elasticity of demand</em> (PED). <em>[2 marks]</em></strong></p><p><span style="color:#FF0000;">Price elasticity of demand (PED) is a measure of the extent to which the demand for a good or service changes due to a change in its price, i.e., the measure of the degree of responsiveness of demand following a change in price.</span></p><p><span style="color:#FF0000;">Award<em> [1 mark]</em> for an answer that shows some understanding of the term PED.</span></p><p><span style="color:#FF0000;">Award <em>[2 marks]</em> for an answer that shows good understanding of the term PED, similar to the example above.</span></p><p><span style="color:#FF0000;"><em>Note</em>: the IB does not require or expect candidates to show the formula for calculating PED.</span></p><hr class="hidden"><p><strong>(b) Comment on the PED for Tokyo Shibaura Electric Co.'s flash memory chips. <em> [2 marks]</em></strong></p><p><span style="color:#FF0000;">The PED for Tokyo Shibaura Electric Co.'s flash memory chips is highly price elastic. This is because prices dropped by around 60% which led to a proportionately larger increase in sales, thereby leading to the 76% rise in profits. The fact that there is intensive competition in the flash memory chips market also means that PED is likely to be quite high; there are plenty of substitutes for customers to choose from, so they will be responsive to changes in price.</span></p><p><span style="color:#FF0000;"></span></p><p><span style="color:#FF0000;">Award<em> [1 mark]</em> for an answer that shows some understanding of the demands of the question.</span></p><p><span style="color:#FF0000;">Award <em>[2 marks]</em> for an answer that shows good understanding of the demands of the question, similar to the example above.</span></p><p><span style="color:#FF0000;"><em>Note</em>: the IB does not require or expect candidates to calculate price elasticity of demand. For reference only, the PED formula gives a value of approx. 1.27 (i.e. 76% ÷ 60%), i.e. demand for the product is price elastic.</span></p><hr class="hidden"><p><strong>(c) Examine whether knowledge of price elasticity of demand (PED) is useful for firms, such as Tokyo Shibaura Electric Co., that face intense competition. <em>[6 marks]</em></strong></p><p><span style="color:#FF0000;">Knowledge of PED might prove useful to firms such as Tokyo Shibaura Electric Co. because:</span></p><ul class="branded"><li><p><span style="color:#FF0000;">It allows firms to know how responsive customers are likely to be if prices change.</span></p></li><li><p><span style="color:#FF0000;">It informs them of appropriate pricing strategies (in this case, reducing prices is beneficial due to the intensity of the competition in the market).</span></p></li><li><p><span style="color:#FF0000;">It informs them about the impact of changing prices on sales revenues and hence profits.</span></p></li></ul><p><span style="color:#FF0000;">However:</span></p><ul class="branded"><li><p><span style="color:#FF0000;">Other elements of the pricing decision need to be considered, e.g., would lowering prices enable <span style="color:#FF0000;"> Tokyo Shibaura Electric Co. </span>to cover its production costs?</span></p></li><li><p><span style="color:#FF0000;"> Tokyo Shibaura Electric Co. </span><span style="color:#FF0000;">will still need to rely on other aspects of the marketing mix (such as price and promotion) to survive in the highly competitive market.</span></p></li></ul><p><span style="color:#FF0000;">Hence, the knowledge of PED might prove to be of some, albeit limited, use to firms that operate in highly competitive markets.</span></p><p><span style="color:#FF0000;">Award <em>[1 - 2 marks] </em>for an answer that shows limited understanding of the demands of the question.</span></p><p><span style="color:#FF0000;"><span style="color:#FF0000;">Award <em>[3 - 4 marks] </em>for an answer that shows some understanding of the demands of the question, with some application to </span><span style="color:#FF0000;">Tokyo Shibaura Electric Co.</span></span></p><p><span style="color:#FF0000;"><span style="color:#FF0000;"></span><span style="color:#FF0000;"></span><span style="color:#FF0000;"><span style="color:#FF0000;">Award <em>[5 - 6 marks] </em>for an answer that shows good understanding of the demands of the question, with effective application of PED to <span style="color:#FF0000;"><span style="color:#FF0000;">Tokyo Shibaura Electric Co.</span></span></span></span></span></p></div></section></div></div></div></div><div class="panel-footer"><div></div></div></div><div class="panel panel-purple panel-expandable"><div class="panel-heading"><a class="expander pull-right" href="#"><span class="fa fa-plus"></span></a><div><p><strong>ATL Activity (Research and Thinking skills)</strong></p></div></div><div class="panel-body"><div><div class="panel-heading"><div><h5><span class="snippet-fa fa fa-linode fa-lg" style="color: rgb(61, 30, 128);"> </span><span style="font-family:arial,helvetica,sans-serif;"><span style="color:#FF0000;"> ATL Activity (Research and Thinking skills) - Pricing methods in context</span></span></h5></div></div><p>Create a table of with three column headings:</p><ol><li>Example of a good or service</li><li>A suitable pricing method</li><li>An unsuitable pricing method</li></ol><p>Outline the reasons for the suitable and unsuitable of the pricing methods referred to. Also, ensure that all the various pricing methods in the syllabus are covered (5 for SL and 9 for HL).</p><p>An example is provided below as a starting point.</p><table><tbody><tr><td><strong>Example of good or service</strong></td><td><strong>Suitable pricing method</strong></td><td><strong>Unsuitable pricing method</strong></td></tr><tr><td>Airline industry (airline tickets)</td><td><p><em>Dynamic pricing</em></p><p>Airlines charge different prices on different days of the year based on varying levels of demand. This enables the airlines to maximize sales revenues based on varying degree of price elasticity of demand throughout the year and different seasons of the year.</p></td><td><p><em>Loss leader pricing</em></p><p>This pricing method relies on the sales of other products to raise total sales revenue; this is not feasible for airline companies that essentially sells one product (the air travel service itself). Also, demand for air travel is relatively price inelastic so there is no benefit of using loss leader pricing as this will not increase sales revenue.</p></td></tr></tbody></table><div class="yellowBg"><h5><span style="color:#FF0000;"><span style="font-family:arial,helvetica,sans-serif;"><span class="snippet-fa fa fa-check-square-o fa-lg" style="color: rgb(61, 30, 128);"> </span> Key concept - Ethics </span></span></h5><p><span class="snippet-fa fa fa-youtube fa-lg" style="color: rgb(202, 72, 26);"> </span> Watch this short feature from <em>CBS News</em> about shrinkflation in the US economy. Discuss the ethics of this approach used by firms to pass on higher prices to consumers.</p></div><div class="yellowBg"><h5><span style="font-family:arial,helvetica,sans-serif;"><span style="color:#FF0000;"><span class="snippet-fa fa fa-check-square-o fa-lg" style="color: rgb(61, 30, 128);"> </span> <span class="snippet-fa fa fa-cubes fa-lg" style="color: rgb(61, 30, 128);"> </span> Key concepts - <span style="font-family:arial,helvetica,sans-serif;"><span style="color:#FF0000;">Ethics</span></span> vs Creativty</span></span></h5><p>Marketers use what is known as the "decoy pricing strategy" to get customers to buy larger sizes of products due to the perceived value. Examples include:</p><ul class="branded"><li><p>Coffee retailers such as Starbucks.</p></li><li><p>Apple, with their product offerings of the iPhone 15 in different sizes (iPhone 15, iPhone 15 Plus, iPhone 15 Pro, and iPhone 15 Pro Max).</p></li><li><p>Fast food restaurants like McDonald's and their "extra value" meal deals.</p></li><li><p>Subscription sites such as Spotify or Netflix that offer different bundles at different prices.</p></li><li><p>Cinemas (movie theatres) that sell popcorn and soft drinks.</p></li></ul><p><img alt="" src="../../../ib/businessmanagement/images/4-marketing/popcorn-pricing.jpg" style="width: 400px; height: 300px;"></p><p>The decoy pricing strategy makes the small and medium options appear overpriced, therefore making the large look like the best deal. In the above example, for a cinema chain in Hong Kong, notice the different prices for popcorn and soft drinks:</p><table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse;width:294pt" width="390"><colgroup><col width="99"><col span="3" width="97"></colgroup><tbody><tr height="19" style="height:14.5pt"><td class="xl64" height="19" style="height:14.5pt;width:75pt" width="99"><strong>Product/Size</strong></td><td class="xl65" style="border-left: medium; width: 73pt; text-align: center;" width="97"><strong>Small</strong></td><td class="xl65" style="border-left: medium; width: 73pt; text-align: center;" width="97"><strong>Medium</strong></td><td class="xl65" style="border-left: medium; width: 73pt; text-align: center;" width="97"><strong>Large</strong></td></tr><tr height="19" style="height:14.5pt"><td class="xl66" height="19" style="height:14.5pt;border-top:none">Popcorn</td><td class="xl67" style="border-top: medium; border-left: medium; text-align: center;">HK$39</td><td class="xl67" style="border-top: medium; border-left: medium; text-align: center;">HK$42</td><td class="xl67" style="border-top: medium; border-left: medium; text-align: center;">HK$44</td></tr><tr height="19" style="height:14.5pt"><td class="xl66" height="19" style="height:14.5pt;border-top:none">Soft drink</td><td class="xl67" style="border-top: medium; border-left: medium; text-align: center;">HK$26</td><td class="xl67" style="border-top: medium; border-left: medium; text-align: center;">HK$28</td><td class="xl67" style="border-top: medium; border-left: medium; text-align: center;">HK$30</td></tr></tbody></table><p>Is this pricing strategy simply creative or unethical in trying to convince customers that the larger size provides better value for money?</p></div><div class="yellowBg"><h5><span style="color:#FF0000;"><span style="font-family:arial,helvetica,sans-serif;"><span class="snippet-fa fa fa-cogs fa-lg" style="color: rgb(61, 30, 128);"> </span> Theory of Knowledge (TOK) </span></span></h5><p>Behavioural economist Dan Ariely claims that<em> “Humans rarely choose things in absolute terms. We don’t have an internal value meter that tells us how much things are worth. Rather, we focus on the relative advantage of one thing over another, and estimate value accordingly.”</em><br>Dan Ariely, Predictably Irrational: The Hidden Forces That Shape Our Decisions</p><p>To what extent are consumers rational in their decision making?</p></div></div></div></div><div class="panel panel-purple panel-expandable"><div class="panel-heading"><div><p><strong>Key terms</strong></p></div></div><div class="panel-body"><div><p><span style="color:#FF0000;">Key terms for HL only students are shown in red text.</span></p><ul class="branded"><li><p><span style="color:#FF0000;"><strong>Competitive pricing</strong> is a pricing method where businesses take account of the prices charged by competitors when setting their own prices.</span></p></li><li><p><span style="color:#FF0000;"><strong>Contribution pricing</strong> is a pricing method that involves setting the price greater than the variable costs per unit of production to ensure that a positive contribution is made towards the firm's fixed costs.</span></p></li><li><p>A <strong>cost-plus</strong> (or<strong> mark-up</strong>) is a pricing strategy that adds a certain percentage to the cost of production in order to determine the selling price of a good or service.</p></li><li><p><span style="color:#FF0000;"><strong>Dynamic pricing</strong> is a pricing method that strives to determine the optimum price at different periods of time. Prices are based on the ability and willingness of customers to pay at a specific time for a good or service.</span></p></li><li><p><strong>Loss leader pricing </strong>refers a product that is sold at a price below the cost of production so that customers may buy other regular and/or higher priced items along with it.</p></li><li><p><span style="font-family:arial,helvetica,sans-serif;"><strong>Penetration pricing</strong> is a pricing method that involves setting a low price in order to enter an industry. It allows the business to compete against existing firms in the industry and to gain market share.</span></p></li><li><p><span style="font-family:arial,helvetica,sans-serif;"><strong>Predatory pricing</strong> is a pricing method that involves charging a low price, sometimes even below the cost, so as to damage the sales of rivals. It is often used by established market leaders to restrict new entrants, thereby limiting competition.</span></p></li><li><div class="panel-body"><p><strong>Premium pricing </strong>involves a business setting a high price for its goods or services because of the associated image, reputation, or status associated with its high-quality products.</p></div></li><li><p><span style="font-family:arial,helvetica,sans-serif;"><strong>Price</strong> refers to the value of a good or service that is paid by the customer. Price will usually cover the costs of production, allowing the business to earn profit.</span></p></li><li><p><span style="color:#FF0000;"><strong>Price elasticity of demand</strong> (PED) measures the extent to which the demand for a product changes due to a change in its price.</span></p></li></ul></div></div><div class="panel-footer"><div></div></div></div><p>Return to the <a href="../44720/45-the-seven-ps-of-the-marketing-mix.html" title="New syllabus 2022 » Unit 4 - Marketing » 4.5 The seven Ps of the marketing mix">Unit 4.5 - The seven Ps of the marketing mix</a> homepage</p><p>Return to the <a href="../43547/unit-4-marketing-wip.html" title="New syllabus 2022 » Unit 4 - Marketing (WIP)">Unit 4 - Marketing</a> homepage</p><p><span style="font-family:arial,helvetica,sans-serif;"><a href="../../index.htm"><img alt="" src="../../../ib/businessmanagement/logo-blue-black-1.png" style="width: 170px; height: 54px;"></a></span></p><script>document.querySelectorAll('.tib-teacher-only').forEach(e => e.remove());</script>
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