Question 2/ 350 words: a) Why is pricing important for small businesses? b) Explain 5...

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General Management

Question 2/ 350 words:
a) Why is pricing important for small businesses?
b) Explain 5 different pricing strategies for small businessesand give examples on each.

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Answer a Pricing is a very key component of the overall business this is true not only for a small business but also true for large organizations Pricing is what determines if the consumer is going to buy for a product While a business can set any price they want it is important to note that a consumer is not going to buy your product if the perceived value is going to be less than the price of the product For example if you price a pair of scissors at 20 but if a consumer is going to see a value of only 10 in the scissor then he is not going to buy it However if the scissors is priced at 9 and if the perceived value is 10 then the consumer will buy it as he feels he would get more value from the product compared to the price he is paying It is very important for a small business to set the right price as larger corporations have financial power to absorb losses initially if required to gain market share Smaller businesses cannot afford that They need to ensure they have lean processes which enable them to be price competitive At the same time they cannot price their products so high that they do not have any takers in the market any new business will thrive only if there is See Answer

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