Business – 6.1 External influences – International | e-Consult
6.1 External influences – International (1 questions)
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The removal of the 5% tariff reduces the import cost per unit by £0.50. This cost saving can be reflected in the retailer’s pricing strategy in two main ways:
- Price reduction: Lowering the retail price can increase price‑elastic demand, potentially boosting sales volume and market share.
- Margin protection: Keeping the retail price unchanged preserves the £0.50 per‑unit profit increase, improving overall profitability.
Choosing between these approaches depends on the retailer’s competitive environment, brand positioning, and the price sensitivity of its target customers.