Pricing Decisions
In today's competitive environment, pricing has emerged as a critical business competency. Executives in consumer, industrial, and service sectors must be prepared to face complex pricing challenges and to leverage pricing in order to capture the greatest market advantage.
One of the things in setting prices, the management should look at the elasticity of demand. Elasticity is simply a measure of how items respond to changes in price. The goal is to provide reliable reporting of the sensitivity of an item to a change in shelf price. In analytical terms, elasticity measures the impact of a one-percent change in shelf price (increase or decrease) on revenue. An elasticity of 1.0, for example, would indicate a one-percent decrease in revenue relative to the price change. An elasticity of 2.0 would show a two-percent decrease in revenue for the price change, and so on. Clearly, as the elasticity numbers grow larger, the…...
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References
Ingenbleek, Paul, Debruyne, Marion, Frambach, Ruud, and Verhallen, Theo M.M. Successful New Product Pricing Practices: A Contingency Approach. Marketing Letters, Vol. 14, No. 4; (2003): 289
Lowengart, Oded, Mizrahi, Shlomo, and Yosef, Rami. Effect of consumer characteristics on optimal reference price. Journal of Revenue and Pricing Management, Vol. 2, No. 3; (2003): 201
Following this analysis, there are several alternative solutions that the team can adopt for the season. All alternative solutions take into consideration (1) the concessions and the right balance between the price of the tickets and the price of concessions and (2) the way the pricing strategy will encourage the participation of people to the games of the local team. Following this, the alternative solutions seem to include:
- offering a low ticket price and keeping the concessions price reasonably high to complete the company's revenues;
- offering a medium to high individual ticket, corroborated with a lower 5-game and full and half-season packages, in order to encourage people to purchase these forms of tickets;
- keeping all ticket prices reasonably high, assuming that the alternatives to the local minor league baseball team are not that numerous.
As always, the best solution seems to be a combination of the alternative solutions presented previously and…...
a) the fast growth specific to the Russian market - if only 53% of women reported using regular pads in 1996, a year later, the percentage of women stating the same thing increased to 78% (i.e. A 47% increase) b) the negative perception of tampons allowing a generous market share for pads - if in 1996, 37% of women reported using tampons on a regular basis, in 1997, only 20% of them continued to use such products c) the Russian women's tendency to move from traditional pads to the more sophisticated ones using Ultra technology and having wings (Plus) - in 1997, Always Plus registered a 5.2% unit share compared with Always Classic which reported a 2.9% unit share for the same year while Always Ultra reported a unit share five times higher that the one in the previous year.
Threats:
a) the high uncertainty of the Russian market due to unpredictable…...
Pricing Decisions
Describe the strategic implications that would need to be considered in setting a price for that product
The public company selected for this analysis is Coca Cola Company. The identified product of the company is the Coca-Cola 20 fl oz bottle, which can be typically obtained from a convenient store, vending machine as well as super market. There are strategic implications that would need to be taken into consideration in setting the price of this particular product, which include the following:
1. Competition in the market
Rivals in the market have a significant impact on pricing decisions. Imperatively, the comparative market shares of market rivals impacts whether an organization can set prices independently or whether such decisions take into account the direction taken by competitors. In this case, Coca Cola Company faces intense competition from brands such as Pepsi and Dr. Pepper who have also unveiled similar products. Despite its dominance in…...
PICE ANALYSIS Pricing Strategy Analysis: New Line of Coffee-Flavored Energy Drinks by ed Bulled Bull is introducing a new line of coffee-flavored energy drinks into the market. The product and place analyses carried out by the marketing team have all yielded positive feedback, and the company wishes to do a price analysis to complete the four Ps of the marketing mix. The price set will dictate how the new product line performs in the market. If the price is too high, it could affect sales given the level of market competition, while if it is low, it could eat into the companys profits, thus threatening its sustainability.ed Bulls Pricing Strategy in elation to the Competitioned Bull is a market leader in the energy drink market. Its closest competitors in the US include Monster, ockstar, CELSIUS, and the Starbucks Energy Drink. A quick price comparison of the ed Bull Energy drink…...
Pricing Strategies
Price and cost variables are not fixed. At times, there are some fixed elements to these costs but in many instances these costs are subject to fluctuation. These fluctuations can derive from changes in buying power, changes in commodity prices and other considerations. Likewise, forces in the external environment can bring about changes in the prices the firm can charge. hen uncertain variables are fixed, the company can find that margins do not hold as expected, which can compromise profit. In addition, the price can be set on the basis of variables on the assumption that the costs are relatively fixed. hen these costs provide not to be fixed, the price does not deliver a strong enough margin. The impacts of these types of decisions can be far-reaching. Firms can decide to enter markets that are not profitable, and make decisions with respect to their product line-ups on the…...
How do the sites support the positioning and pricing of the three brands?
They are dramatically different, with the Monogram site being completely separate, supporting the premium positioning. The site is done to connote the premium position and the use of these appliances in custom homes. GE Profile is more mainstream and focuses on the stylish yet utilitarian aspects of their product line. The GE site itself is more focused on functionality of products. The differences in branding and website approach in terms of positioning and pricing a significantly different and support the unique value propositions of each product series clearly and very well.
As a consumer, how do you perceive GE's appliance pricing? Is it good or fair to consumers? Are you happy with its pricing decisions?
Given how expensive it is to produce high quality appliances and the costs consumers incur when appliances aren't working correctly, I think their pricing…...
46). Likewise, Gillispie suggests that an incremental approach can be used to "test the waters" for even very small companies seeking to project an internationalized presence. In this regard, Gillespie recommends that companies, "Craft a scaleable master design that represents the major aspects of your business worldwide and anticipates the degree of localization that will be required in each market. The degree of localization can have a real impact on budgets and timelines" (2008, p. 45). These are important factors for companies in general where limited resources and a lack of experience may preclude more aggressive internationalization initiatives, and these issues are directly related to a company's internal resources as discussed further below.
Internal resources
The company has a wide range of specialized internal resources which are described in Table 2 below.
Table 2
Internal resources of BG Limited
Business Unit
Description
Specialist Cleaning
BG's Specialist Cleaning division offers a comprehensive range of services designed to restore…...
Combining these demographic factors and the assumption that busy and hectic professionals want convenience in a premium beverage, the concept of a bottled premium decaffeinated coffee drink, which can sustain the pricing required to make the proposed beverage successful, begins to take shape as a concept. Besides, Pepsi and Starbucks have discussed creating a partnership for years, and the introduction of bottled decaf lattes and frappacinos in a variety of flavors could command the price points required to make this a successful product. Additional factors that favor this product concept are the relatively early stages in the produce lifecycle this type of bottled drink is in today, and the potential for growing an entire bottled family of Starbucks beverage. In short, the elasticity of demand for this proposed bottling of decaf Starbuck's drinks could be a significant revenue producer over time for Pepsi.
Perform a Break-Even Analysis on your selected price…...
Pricing Strategies and Decisions
Pricing Strategy Management
Pricing Policies, Processes and Methods
Policies used to manage Tesla’s pricing strategy. Currently Tesla is not only benefiting by but is actually relying on government subsidies to sell its cars. Subsidies come from electric vehicle (EV) tax credits that purchasers are able to obtain whenever they buy a Tesla. The problem is that these credits are only given to consumers for a set duration. Once the government ends the subsidy, sales drop drastically, as has been in the case in Hong Kong where tax incentives basically were the whole of Tesla’s pricing strategy—and once the tax incentives ended, sales were decimated. Currently in Norway, which is Tesla’s biggest European market, consumers pay no import tax or any of the purchase taxes that apply to non-EV cars—which is a big incentive (Tesla 10-K, 2018, p. 22). In the Netherlands, sales are soaring this year because the tax…...
Pricing Strategy
There are several critical factors that affect making pricing decisions: customers, competitors, regulations, government laws, the overall economy, and production costs and some of the most important variables to look at when deciding on a pricing strategy. As Zeng, Dasgupta and Weinberg (2016) put it, differentiation is key to developing a pricing strategy that works for a company that has to set itself apart from competitors in order to secure market share. For Tesla, which is the subject of this paper, the electric vehicle (EV) market is beginning to heat up as competitors come into the business with their own products. That means Tesla has to differentiate itself with a pricing strategy that will appeal to the biggest consumer base in the market—the average middle class consumer. In the past, Tesla has relied on the luxury brand market to drive sales—but with investors anxious for a return on investment…...
Pricing Misconception
The two stores whose pricing strategy has been looked at here are GIM Computers and Ginstar Computers, both located Downtown Atlanta, with the varying prices for their computer related products. The computer related products were picked for this case study since their specifications are easier to match to the last detail hence an easier comparison of the prices.
The five products selected are Seagate 1TB hard disk,
Product
GIM Computers price ($)
Ginstar Computers price ($)
Seagate 1TB hard disk
Internal Floppy drive
External Floppy drive
Microsoft windows 7 professional
GIM Computers.com and Ginstar Computers Inc. website.
Customer-based pricing
From the pricing trend seen above, it is apparent that the two businesses are engage in the customer-based pricing strategy. They have the customer needs and way of thinking in mind and specifically employs the psychological pricing as a sub-set of customer-based pricing strategy. This is bearing the unusual price points that are detected in their price tags. For instance the…...
Pricing and Distribution:
As an extremely important decision for a company, pricing is the only element of the marketing mix that generates revenue. The positioning of a product in the market is dependent on its pricing since customers tend to greatly resist attempts to change price once it has been set up. As compared to other elements in the marketing mix, price is the variable with which a competitive response can be quickly implemented. On the contrary, distribution basically involves the process of getting the product from the manufacturer to the intended consumer.
How Pricing and Distribution Complement each other at Costco:
Costco is a company that has itself as a means with which brides and grooms can create an unforgettable wedding day through reasonable prices. In the past few years, the warehouse store sells all wedding-related accessories including engagement rings, invitations, flowers, and trips for honeymoon. While it's difficult to quantify the…...
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References:
Berk, C.C. (2011, March 7). Here Comes the Bride, All Dressed by Costco. Retrieved January
Best of all, any initiative in these areas, priced fairly for the island natives, delivers significant social value, or economic good for the nation and abodes by Mr. Morale's belief that in the long run, economics drives everything needs to be added to that by doing these core processes well, his company is doing good. The social conscience of Mr. Morales is also clear, and the ability to take the company's respected process-centric approach to problem-solving and apply it to the needs of Kava while at the same time earning a profit is a win/win for both the company and the nation. The concentration on healthcare especially and the development of a pediatrics clinic, potentially even underwritten by the local government for the citizens would also be significant in its contribution and revenue potential.
What Alex and Nik need to do is find broken processes in key areas and set…...
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References
Alstyne, Marshall van, Erik Brynjolfsson, and Stuart Madnick (1997). "The Matrix of Change: A Tool for Business Process Reengineering." MIT Sloan School Working Papers available on the Internet, accessed on February 5, 2007:
Alstyne, Marshall van, Erik Brynjolfsson, and Stuart Madnick (1995). "Why Not One Big Database? Principles for Data Ownership." Decision Support Systems 15.4 (1995): 267-284.
The Agenda (2003) - Chapter 4: Put Processes First. The Agenda: What Every Business Must Do to Dominate the Decade. Accessed from Michael Hammer and Company website on February 5, 2007:
From a supply chain standpoint, pricing departments must also create a high level of communication and collaboration across a business as well. Their role is to be the orchestrators of internal effort to manage suppliers to pricing and margin levels, ensuring consistency and focus on share goals. This is one of the primary reasons pricing has now become a strategic initiative within many businesses. For change to occur in how companies do their pricing strategies, it often takes a senior executive to manage the change in processes and systems to ensure pricing becomes strategy and shifts away from being tactical in focus (Marn, oegner, Zawada, 26).
From the sell-side or the distribution and selling channels standpoint, pricing has never been more critically important to a company's profitability. The continued consolidation of industries and commoditization of products making tracking pricing elasticity by product category critical, especially when they are sold through…...
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References
Manu Carricano, Jean-Francois Trinquecoste, and Juan-Antonio Mondejar. "The rise of the pricing function: origins and perspectives. " the Journal of Product and Brand Management 19.7 (2010): 468.
Thomas H. Davenport. "Make Better Decisions. " Harvard Business Review 1 Nov. 2009
Vrinda Kadiyali, Pradeep Chintagunta, and Naufel Vilcassim. "Manufacturer-retailer channel interactions and implications for channel power: An empirical investigation of pricing in a local market. " Marketing Science 19.2 (2000): 127.
Krishna, a., F. Feinberg, and Z. Zhang. "Should Price Increases Be Targeted?-Pricing Power and Selective vs. Across-the-Board Price Increases. " Management Science 53.9 (2007): 1407-1422.
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