Higher Business ManagementInstructions

Read core notes pages 22-27Read 29-31

then attempt the next set of questions

Describe 4 different sales promotions that could be carried out by a retailer 4 marks

Public Relations Question

2008 question 1(d)

Describe the methods available to a Public Relations department to improve the image of

an organisation.

5 marks!

Think about the COMMAND WORD

– Describe

Answer a question

• Describe three pricing tactics that could be used when an organisation attempts to break into a new market.(6 marks) 2009

• 12 minutes

Solution to promotion question

• • Free samples to consumers to attempt to make them purchase the• product if they like the sample• • Credit facilities given to customers to allow them to pay back over a• period of time• • Bonus packs for customers that often have extra free amounts or a gift• included• • BOGOF – buy one item and get another item free of charge• • Competitions used by companies which consumers enter to win prizes• • Demonstrations of products in supermarkets to let customers try• products/services before purchasing• • Loyalty cards• (No ID marks are awarded, ie, ‘credit facilities’ would not be credited with• a mark. A description must be given.)• (4)• Do not accept advertising

Solution-Public relations question

Methods available for PR departments to use to improve the image of an organisation include:

• Using a press release to counteract/avoid bad publicity eg Iceland dropping Kerry Catona for drug taking – this does not look good for the family centred organisation (Development point for example)

• Give donations to charities and get media coverage• Sponsor events nationally or locally• Product endorsements/celebrity endorsement eg David Beckham with Gillette, Lewis

Hamilton with Santander/Abbey or Gary Linekar with Walkers crisps• Handing out publicity information• Handing out company merchandise• Hold a press conference and invite media to attend – highlights organisation and image

through 2-way interaction

• Each bullet point is awarded one mark. Marks often allocated for good development points and examples

Solution – pricing questionSolution – pricing question• High price – price is set higher than competitors to give

the image of quality and exclusiveness.

• Low price – price is set lower than competitors to attract customers to their product/service.

• Skimming – price is set high initially, when no competition exists. When competitors enter the market, price is lowered to market price.

• Market/competitive pricing – price is set at the same level as competitors, normally used for products that are identical.

Solution (cont’d)Solution (cont’d)• Penetration pricing – price is set slightly lower than competitors to

attract customers; once a customer base is established, the price is slowly increased to same as competitors

• Promotional pricing – a low price is set for a short period of time to boost sales in the short term, possibly even making a loss on the product. This is often used by supermarkets to attract customers.

• Destroyer pricing – price is set very low compared to competitors and once there is no competition in the market the price is then put back up to the previous level or higher. This is mainly used by larger organisations to destroy competition, as you must have large reserves to sustain this tactic over any length of time.

• Cost-plus pricing – is the cost of buying in the materials with a mark-up added on.