Syllabus: Cambridge - IGCSE Business Studies
Module: 3.3 Marketing Mix
Lesson: 3.3.2 Price

Introduction

The Cambridge IGCSE Business Studies syllabus (0450) requires students to develop an understanding of the core functional areas of business — one of which is the marketing mix. In section 3.3.2 Price, learners explore how pricing strategies can influence consumer behaviour and business performance.

This part of the course is particularly important for linking commercial theory with practical application. It provides opportunities to foster commercial awareness, workplace readiness, and strategic decision-making — themes that directly support Gatsby Benchmark 4: Linking curriculum learning to careers.

Key Concepts

According to the Cambridge IGCSE Business Studies syllabus, students should be able to:

• Understand the role of price in the marketing mix and how it interacts with product, place and promotion.

• Identify and explain different pricing strategies, including:

  • Cost-plus pricing

  • Competitive pricing

  • Penetration pricing

  • Price skimming

  • Promotional pricing

  • Psychological pricing

• Evaluate when and why each pricing strategy might be used, considering:

  • Type of product

  • Level of competition

  • Market demand

  • Business objectives

• Analyse the impact of pricing decisions on revenue, sales volume and brand perception.

This aligns with the Cambridge assessment objective AO2: application of knowledge and understanding to business contexts.

Real-World Relevance

Pricing is one of the most dynamic elements of any business strategy — and its real-world application is immediately observable for students:

• Penetration pricing: Streaming services like Disney+ offered low initial pricing to attract early subscribers.

• Price skimming: Apple consistently uses this strategy when launching new iPhones, targeting early adopters willing to pay more.

• Psychological pricing: Retailers such as Boots or Tesco frequently price products at £9.99 rather than £10 to influence perceived value.

Discussing these examples allows students to grasp how theory translates into everyday consumer experiences and corporate strategies.

How It’s Assessed

In the Cambridge IGCSE assessment, pricing appears across both Paper 1 (short-answer) and Paper 2 (data-response and case study) formats:

• Paper 1: May ask students to define a pricing strategy or explain advantages/disadvantages of a particular approach.

• Paper 2: Often includes a business scenario where students must recommend a suitable pricing strategy, justifying it using contextual analysis.

Common command words include:

• Identify – recall of pricing methods.

• Explain – justification of strategy based on market context.

• Analyse – consideration of internal and external influences.

• Evaluate – weighing up multiple pricing options to make a justified recommendation.

For example:
“Using the information provided, recommend a suitable pricing strategy for the new product. Justify your answer.”

Enterprise Skills Integration

Teaching pricing strategies offers rich opportunities to embed Enterprise Skills themes, particularly:

• Commercial Awareness: Understanding how pricing affects business objectives and stakeholder perceptions.

• Decision-Making & Problem-Solving: Analysing scenarios with incomplete information and making strategic recommendations.

• Financial Literacy: Linking pricing to revenue, profit margins and cost structures.

• Workplace Readiness: Appreciating how pricing aligns with broader marketing goals and customer expectations.

For example, students could simulate setting prices for a school-run business or compare how pricing might differ in a competitive versus monopolistic market.

Careers Links

This topic supports Gatsby Benchmarks 4, 5 and 6 through both curriculum integration and employer relevance:

• Benchmark 4: Students link classroom learning to real business decisions, such as pricing impact on market success.

• Benchmark 5: Incorporate employer video interviews on pricing decisions in retail or tech sectors.

• Benchmark 6: Role-play simulations can mimic pricing decisions in a simulated work environment.

Related Careers:

• Marketing Executive

• Product Manager

• Sales Analyst

• Retail Buyer

• Brand Manager

• Commercial Manager

Teaching Notes

Tips for Delivery:

• Start with relatable products: e.g. pricing of chocolate bars, mobile apps or clothing.

• Use student-led mini case studies: groups apply different strategies to the same product and compare outcomes.

• Incorporate pricing tools: Have students calculate break-even points to link with profit-based decisions.

Common Pitfalls:

• Students often confuse cost-plus with penetration pricing — ensure clear distinctions.

• Avoid over-simplified answers like “low prices = high sales” — stress that context and objectives matter.

• Many forget that multiple pricing strategies can exist within the same business (e.g. Apple using both skimming and psychological pricing).

Extension Ideas:

• Debate task: Which pricing strategy should Netflix adopt next?

• Numeracy link: Calculate effects of changing price on revenue using basic elasticity assumptions.

• Cross-curricular: Explore how consumer psychology influences decision-making in PSHE or Psychology.