Do you think GKA should change its pricing strategy as the business expands? Justify your answer.
Award 1 mark for identification of relevant point (s)
Award 1 mark for a relevant reference made to this business Award up to 2 marks for relevant development of point(s)
Award up to 2 marks for a justified decision made as to whether GKA should change its pricing strategy as the business expands.
Relevant points might include:
· identification of a pricing strategy [k]
· actions of competitors [k]
· cost of new locations [k] in high income areas [app] may make it hard to control costs [an]
· diseconomies of scale [k] from extra 100 shops [app] leading to a rise in average costs [an]
· economies of scale[k] may allow them to charge lower prices[an]
· current prices give the image of poor quality [k] because they are low prices [app] so may not attract new customers [an]
they would lose their USP if they change price [k] leading to a loss of the current customer base [an] in areas where average incomes are low [app]