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Principles of pricing strategies
Product pricing economics
Product pricing economics
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Price strategy: Local cable company
Introduction
The underlying assignment is based on developing pricing strategy for a local cable company. The pricing strategy is designed in accordance with pricing objective, demand of the service, estimating cost elements, preparing competitive price analysis and selecting pricing method and determining final price accordingly. All these aspects are discussed in detailed terms in underlying sections.
Price objective
The concerned local company will pursue and follow customer-related price objectives. Under this, it will aim to win the confidence of customer and satisfying them in enriched manner. These two price objectives will prove as stepping stone in creating demand of the company’s product.
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In detailed terms, primary cost elements include material costs, salary costs and other costs necessary to incur for manufacturing or preparing cost. Likewise, secondary cost elements are depreciation costs, petty expenses, maintenance and updation expenses and some other incurring at regular intervals in daily operations. It is worth mentioning that both primary and secondary cost elements are bound to incur as concerned business firm can’t ignore and underestimate the fact (Cant, Strydom, Jooste & Plessis, 2009). On the basis of this, it is said that cost elements is having direct impact on price of the service. There exists direct linear equation in cost elements and its impact on price of service. The high range cost elements automatically raise price of service while low range cost elements decrease price of service.
It means rise in one aspect automatically increase other one and vice-versa. For keeping price of the service low, it is necessary for local cable company to keep price elements in control and within budgetary limits. And, if company decided to keep price low, even if cost elements are increasing then it will result in loss to the company.
Competitive price
CenturyLink is one of the larger communications companies within the United States and has even expanded abroad to other countries. When analyzing the SWOT analysis for CenturyLink, I was able to identify several strengths that set them apart from their competitors. As mentioned, they are distributing services in over 20 states currently and continue to broaden services to reach more clientele. They pride themselves on exceling in data communications and network systems databases which has allowed them to become one of the desired communication companies.
Price discrimination can be defines as when a firm offers an “individual good at different prices to different consumers” The Library of Economics and Liberty elaborates on its pricing strategy, stating Comcast offers different pricing depending on what features the consumer desires. For instance, the cable company will charge a higher price to a person who uses several services as part of their cable package. Conversely, the firm charges a very low price to someone who would “otherwise not be interested” , providing basic services at a minimum price. It takes advantage of the regulation imposed on the cable industry by offering the required basic package at seemingly attractive prices. Using this pricing system allows for it to attract different consumers whose maximum price they are willing to pay differs. Recently, Comcast attempted a new billing strategy by introducing a data usage cap. It essentially expanded on the company’s existing price discrimination method by charging customers according to how much data they used each month. Comcast also utilizes penetration pricing, where it offers its product at low prices to attract new consumers, later raising the prices once the customer is subscribed for a certain amount of time. Generally it claims the original prices were promotional only, lasting only a small amount of
Oligopolies present kinked demand curves. These curves are downward-sloping, similar to traditional ones. However, they are distinguished by a convex bend at a discontinuity. This change in elasticity shows that price rises will not be match by competitors, yet prices reductions will (B&W). Therefore, firms will tend not to raise prices because a small increase will lose customers...
When a business aims to be as successful as possible in selling its products and services, it must examine in detail whether or not the products will be attractive and necessary; if the price is optimal; if the product is being distributed in the best locations; and finally, how interest and awareness can be created for the products. In order for a business to target all of these elements at the right people at the right time, it must employ the right type of marketing mix: Product, Price, Place and Promotion.
Atlantic Computer is a large manufacturer of servers and other high-tech products. They are known for providing premium high end servers. Atlantic Computer’s is in the process of introducing Tronn, a new basic server, which includes Performance Enhancing Server Accelerator (PESA) software. This software will allow Tronn to perform up to four times faster than its standard speed. Therefore these two new products were specifically designed to sell as a bundle or “Atlantic Bundle.” Jason Jowers, fresh off of his MBA degree is responsible for developing the pricing strategy for the “Atlantic Bundle. After much research Jowers narrowed down to four different routes on how the bundle can be priced: status quo, competitive, cost-plus, or value-in.
Employee motivation is one of the keys to success in any business, especially in a retail sales environment. It is particularly important to understand how employee motivation can be impacted by the strengths and weaknesses of AT&T’s retail sales consultant position (RSC). A series of interviews and surveys were conducted over a two-week period with employees of AT&T in the RSC position as well as retail management positions to determine how the employees really feel about this position as well as internal strengths and weaknesses that contribute to employee motivation. Although there are a lot of positive factors that keep the employees motivated within AT&T, there are some weaknesses that can cause employees to become demotivated.
Still, there is no permanence in the market price hike above the natural price caused by demand however abundant demand can be. The value will always depend on the expenses of its production, which includes profits to producers. Therefore, the factors that change permanent price in the expenses of production, and their relationship with demand are prime subjects of study.
test whatever it's a bad effect or not. So when it used on humans, we
...ld do so. Since rapid expansion of the cable industry over the past several years and a weak economy had resulted in a temporary oversupply of cable (thus, a number of good businesses were looking for buyers to avoid bankruptcy or liquidation). Industry experts estimated the cost to acquire a cable manufacturer at between $10 million and $15 million. This is quite plausible with OFC’s healthy cash position. This acquisition should occur quickly before the economy recovered and the supply of fiber optic cable came back into balance with demand. This will allow OFC to gain instant access to both single and multi-mode without the prerequisite internal R&D cycle time. It would also pose an excellent value at a time when industry firm price tags are beaten down. These features would aid OFC in protecting its existing niche while expanding into new emerging markets.
According to the Federal Communications Commission, expanded basic cable rates have increased at a rate of approximately 6% per year since 1995. This is double the Consumer Price Index of 2.9%, and does not include charges for equipment, fees and taxes. Therefore, if cable prices continue to rise at double the rate of other consumer goods, it stands to reason that more shoppers will consider alternative sources for their video entertainment. ("REPORT ON CABLE INDUSTRY PRICES"
Activity-based costing (ABC) is a costing method that is designed to provide managers with cost information for strategic and other decisions that potentially affect capacity and therefore “fixed” as well as variable costs. Activity-based costing is mostly used for internal decision making and managing activities while traditional costing method is used to provide data for external financial reports. Most organization uses activity-based costing as an addition system for using traditional absorption costing as sometimes the traditional cost system misleads the product’s profitability. In a company, there are many products on sale, if one product is sold at a high price with low product margin and a product with high product margin at a low price, it may result in a loss. In addition, due to the reason that cost drivers and enterprises business may change, activity-based costing analysis also needs to be revised periodically. This amendment should be prompted to change pricing, product, customer focus and market share strategy to improve corporate profitability.
The SWOT analysis is a useful tool for identifying our personal strengths, weaknesses, opportunities, and threats to our plans and goals. According to a “Fuel My Motivation” article (2010), this analysis considers internal influences that can positively or negatively affect our ability to achieve our goals. The internal factors are our strengths and weaknesses. Also considered are opportunities and threats, which are external influences that can have a positive or negative impact on the ability to achieve our goals. I will share how the self-assessment instruments and self-exercises in this course have contributed to assessing and understanding my strengths and weaknesses. I will also discuss techniques I will use to leverage my strengths and understand my weaknesses. In addition, I will consider opportunities that I can take advantage of and the threats that can possibly impede my progress.
According to this, it is obvious that the objective of marketing is to satisfy demand of customers by those ‘individual and organizational activities’ like promotion or pricing of goods, which are all just means to achieve that. Additionally, organizations could stand out from their competitors once they meet the needs of customers better than others. Thus, it can be said that the successful marketing is to provide competitive advantages for organizations by doing better in satisfying customers’ desires through products and other marketing activities.
3. The factors that affect the cost management are competition, growth in the same industry as the company, and improvements in manufacturing technology.
By offering the lowest price products make the consumers believed in us and creating the strong relationship with the customer value.