...Havard Business SCHOOL PAPER: Universal Car Rental Pricing Simulation July 2012 Universal Car Rental Pricing Simulation Background: The objective of the simulation was to maximise profits of Universal Car Rental Company. The simulation was run across three cities in Florida; Tampa, Orlando and Miami. Overall strategy: We adopted a strategy of offering the highest price achievable whilst maintaining 100% capacity utilisation irrespective of market share. In the context of the scenario, where growth in demand outstripped supply and with only twelve ‘rounds’, we felt market share was not fundamentally important. In respect of setting the pricing level, we calculated the price elasticity of demand to give us an insight into the increment we could increase the price. We concluded that price elasticity of supply was irrelevant in the context of this simulation. Market Demand: customer price response We were quickly able to observe that weekday and weekend demand outstripped supply, we deduced that weekday demand was a proxy for business users and weekend demand was a proxy for leisure users. After running the simulation for the first quarter we were able to analyse the Price Elasticity of Demand (PED). In general we found that demand from business users was price inelastic, whereas leisure users were price sensitive. The ranking of price inelasticity by market as calculated from our Quarter 1 numbers is shown in table 1. The graphical representation of the computations...
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...Products, Pricing, and Channels Introduction The all-new Mustang is the next chapter in the life of one of the world’s most iconic cars. The 2015 Ford Mustang is loaded with innovative technologies and delivers high levels of performance and style. “The Mustang is the first car to offer four, six, and eight-cylinder engines that each produces at least 300 horsepower. With more powertrain options to choose from, there is a Mustang to fit any lifestyle. The 3.7-liter V6 and upgraded 5.0-liter V8 are joined by an all-new 2.3-liter Eco Boost engine that brings state-of-the-art technology to Mustang.” (Ford, 2014) Description & Features The Mustang’s Eco Boost engine uses direct injection, variable cam timing and turbocharging to deliver plenty of usable performance across a broad RPM range. Mustang is equipped with over 300 horsepower and 270 lb.-ft. of torque on tap from the standard 3.7-liter V6, even the most accessible Mustang delivers the performance customers expect. Drivers will appreciate smoother shifts from the updated manual gearbox while a reworked automatic transmission features new steering wheel-mounted shift paddles for drivers who want the choice between convenience and control. (Ford, 2014) There are several key design features that define the all-new Mustang, including, a lower, wider stance with a reduction in roof height, and wider rear fenders and track. The return of Mustang fastback with a sleeker profile enabled by more steeply sloped windshield...
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...When creating a new product for a company, you would need to know the marketing mix, which provides an excellent framework for developing marketing plans. The marketing mix generally consists of four key things and they are product, price, promotion and place, when these marketing objectives have been agreed upon, marketing plans must be developed to achieve goals (Bevan, et al., 2010). The first thing that you have to look at is the product, which is anything that can be offered to a market that can satisfy a need. The marketing mix has objective that they are meant to achieve such as support brand building, the marketing mix supports the building of brands through product strategies. Building brand awareness can be very beneficial to a business and allows them to use its marketing strategies more effectively, because people are more likely to buy for a very well-known brand rather than a lesser known brand. Another objective of the marketing mix is to satisfy needs and aspirations of targeted group of customers, this is a good objective to have because of a business that’s main aim is profit, then the customers are a big concern and if you don’t meet the needs of the customers then they are highly unlikely to want to buy things from you again, because a successful product will convince the customer that they need the product. For the marketing mix, it is important that all of the components of the marketing mix balance out, like when deciding the place the company has to make...
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...offers models such as: Passenger Cars, Luxury Cars, Vans and Buses. Volkswagen has a reputation for producing vehicles with safety and reliability in mind. They are also very concerned with the environment. Despite producing automobiles, Volkswagen also provides the Financial Services including leasing, banking and insurance. Passenger and Commercial Cars: Passat, Jetta, Golf (Volkswagen Passenger Cars), SKODA, SEAT Target: young single professionals between the ages of 18 and 27 married couples with children who value safety retired couples aged 50 and older who have the necessary income saved to travel and enjoy the remainder of the lives Luxury and Sports Cars Audi, BENTLY, PORSCHE Target: smarter people that really enjoy the driving experience Successful businessman and governor who usually lie in better neighborhoods Trucks and Buses SCANIA, MAN Target: big enterprise and government Public transportation group Financial Services: Target: conservative people who paying closer to the total cost of mobility People who decide just to use a car not buy one The car buyers who need financing and insurance Price Volkswagen has consistently acted with a premium pricing strategy. Their products typically have a high price, on average 10 percent higher than competitors (reference: consumer report by Volkswagen, 2012); however, the return is more upscale driving and ownership experience. In recent years, their pricing strategy has decreased to only...
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...deregulation to work, its market structure must closely resemble pure competition. The airline industry appeared to be oligopolistic and would prevent new entrants. Some consensus did exist that the airline industry could perform competitively. This provides the rationale for the theory, which proposes that potential competition be substituted for the active participation of many sellers. For the theory to work, four conditions have to be met: no barrier to market entry, no economics of scale, consumers would be willing to switch quickly among carriers, and existing carriers had to be prevented from responding to new entrants' lower prices. 3. Define and discuss Cost of Service Pricing. ANS: Cost of service pricing takes a marginal-cost approach to pricing. Cost of service pricing can also be analyzed as a total cost or fully allocated cost approach to price setting, where the price charged by a carrier for a movement of a commodity represents the recovery of the related costs to make the movement. Here: Price = FC + VC + Profit. Price is determined by the allocation of...
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...Subject Code: IMT-17 Subject Name : INTERNATIONAL Notes: a. b. c. d. Write answers in your own words as far as possible and refrain from copying from the text books/handouts. Answers of Ist Set (Part-A), IInd Set (Part-B), IIIrd Set (Part – C) and Set-IV (Case Study) must be sent together. Mail the answer sheets alongwith the copy of assignments for evaluation & return. Only hand written assignments shall be accepted. 5 Questions, each question carries 1 marks. 5 Questions, each question carries 1 marks. 5 Questions, each question carries 1 marks. Confine your answers to 150 to 200 Words. Two Case Studies : 5 Marks. Each case study carries 2.5 marks. MARKETING A. First Set of Assignments: B. Second Set of Assignments: C. Third Set of Assignments: D. Forth Set of Assignments: Objective: 1. To give an overview of the scenario on international marketing which offer unlimited opportunities to the organization 2. To equip students with the understanding of environments with capability to develop products and other marking mix elements to develop effective market plan. 3. To imbibe an outlook to win world markets Contents GLOBALIZATION: THOUGHTS AND PROCESS For and Against Globalization; Determinants of Global Trade; Global Trade Dynamics; Global Trade and Economy Flows During -; International Competition; Outgrowth of New Markets; Defining Concepts of Global Trade; Drivers of Globalization;Organizing Global Marketing; Global Local Marketing; Objectives of Global Marketing...
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...Running head: BIG DRIVE AUTO Big Drive Auto Michelle International Economics August 29, 2011 Big Drive Auto In the automotive industry there is evidence that supports the future of economics within the automotive industry such as Big Drive Auto, a multi-manufacture of cars and trucks. Not only does the company conduct contributions in the coolant, tire replacement and motor oil industry, but Big Drive Auto, also, services parts for repairs and sales vehicles. Big Auto will have to forecast their prior records kept within the past ten years in order to remain successful as well as needing growth within the automotive industry if they are to stay ahead of the automotive industry. An evaluation, in spite of the fluctuations in the economy, of the revenue generated on service and auto sales and of the companies past sales of parts, this evaluation and/or information will assist Big Auto Drive’s management for the organization for future production plans. A future demonstration pricing strategy will be used from the data of previous years and in keeping the company moving forward, the management’s awareness of the economy in recent years will be considered in helping with product recommendations for Big Drive Auto. In moving forward, Big Drive Auto will need to assess in the upcoming years the mathematical equations and take into consideration operations, cost, economic analysis and productivity in order to create a strategy that is solid in dealing with the automotive...
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...A RENTAL CAR COMPANY:1 You are a consultant hired by a major national rental car company that is seeking to improve its pricing strategy. In particular, it is considering adopting a strategy of customized pricing tailored to the underlying micro-markets that it might face. In the rental car business (as in the hotel and resort business), price customization is known as revenue management. As a test case, your client is considering a pricing experiment at Lambert Airport in St. Louis, Missouri, a location at which your client has dominant market share and thus can safely ignore possible reactions of competitors. Careful market research has revealed that the St. Louis market is composed of two micromarkets. The first comprises business travelers; the second comprises vacation travelers. The demand curves for these two micro-markets are given below: Micro-market Business travelers Vacation travelers Demand curve equation Q1= 3,600 – 20P Q2= 3,000 – 30P In the table above, P is the daily rental rate, while Q1 and Q2 are the numbers of vehicles rented per day by business travelers and vacation travelers, respectively. Like airlines, the rental car business is one in which the marginal cost of serving an extra customer is nearly zero. For this reason, throughout this exercise, we will assume that your client’s MC = 0. (Of course, your client has fixed costs, but as an astute practitioner of microeconomics, you know that these fixed costs are not relevant to the pricing decision...
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...other. For creating a Product you have to make all decisions regarding your product like variety, quality, design, features, brand name, packaging, services etc. The tangible product I choose is cars. The product is interesting to me because where I live it really aims for the needs of consumers. In many places it aims for both needs and wants. According to CNN Toyota won the global sales for 2015. Toyotas market not only concentrates on one consumer but various. It is very diverse like the Welcab series automobile is design for people with disabilities and the elderly. The welcab series is wheelchair accessible and they can be driven by people who have no legs. Toyota reduces market-based risk because it reaches a wider market. When Toyota was founded in 1937 it was a local business and then it became a global company in the auto motive industry. The price is when the product is ready for sell, including discounts. This requires a lot of research from the competition environment. The price is the amount a customer pays for the product. Toyotas market pricing really demonstrates how the marketing mix is involve. They use Marketing-oriented pricing and value-based pricing. Toyota prices vary depending on many things like the line, model, type etc. The market oriented pricing is used depending on...
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...2.0 Pricing and Promotional Analysis 2.1 Line Stretching The Line Stretching method is applied to the Malaysia second largest car producer Perodua. This company uses both Down Market Stretch and Up Market Stretch. For example, the Perodua Alza has total of 3 different versions. The normal version of Perodua Alza cost about RM59k for automatic transmission. The company introduced an advanced version of Perodua Alza later which comes in a better quality interior, built in GPS and a more stylish bodykit. The advanced version of Perodua Alza cost about RM70k for automatic transmission and it is an Up Stretch Market pricing product. According to Motortrader.com (2012), a lower end version of Perodua Alza was introduced by the company in 2012 and it is called the Perodua Alza SR. The Perodua Alza SR which is a Down Market Stretch product was introduced to enable everyone can afford to buy this most sellable MPV. The selling price for this low end version of Perodua Alza was estimated about RM53k as only the normal appliances were used in the car and the sport rim size of the car is also smaller. 2.2 Optional-Feature Pricing As in Optional-Feature Pricing, most of the automobile company like Lexus, Toyota and Honda as well adopt the Optional-Feature Pricing. For example, the Lexus CT-200h which is a sporty hybrid car is available in two variant which is the normal variant and luxury variant. The normal variant of CT-200h was priced at RM167k where the luxury version of CT-200h...
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...Identify the adjustments made to the approximate price level on the basis of discounts, allowances, and geography. Discuss the laws and regulations affecting specific pricing practices. LO4 1-3 Arriving at the Final Price The TATA NANO The Car Priced at one Lakh 1-4 Opening Story – The NANO Car FIGURE 14-1 The six steps in setting price. The first three steps were covered in Chapter 13 and the last three steps in Chapter 14. LO1 1-5 Elements making up a Price – Recap of Chapter 13 FIGURE 14-2 Four approaches for selecting an approximate price level LO1 1-6 Establishing an ‘Appropriate Price Level’ Selecting an Appropriate Price Level Demand-Oriented Pricing Approaches Skimming Pricing Penetration Pricing Price Lining Prestige Pricing LO1 1-7 Establishing an ‘Appropriate Price Level’ FIGURE 14-3 Demand curves for two demand-oriented pricing approaches LO1 1-8 Establishing an ‘Appropriate Price Level’ Selecting an Appropriate Price Level Demand-Oriented Pricing Approaches Odd-Even Pricing Target Pricing Bundle Pricing Yield Management Pricing LO1 1-9 Establishing an ‘Appropriate Price Level’ Selecting an Appropriate Price Level Cost-Oriented Pricing Approaches Standard Markup Pricing Cost-Plus...
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...supplement this with advertising focused on their current consumer as well as additional customer service benefits for their current consumers who could progress from the 3 Series to 5 Series to 7 Series if properly maintained. Additionally, BMW in efforts to differentiate itself with seven new series in 2002 may potentially cannibalize the brand and force entrance into the mass-market. In order to avoid this issue BMW should focus on differentiating series and cars models from each other to better target their customers. In 2000, BMW had reached new record high sales in the United States after recovering from a record low in 1992. Due to this new high of sales along with no new car production for the next six months, there was an opportunity for branding BMW’s name specifically to differentiate it from the competition. This opportunity led to the creation of five short films that were only available online at BWMFilms.com. BMW hired Clive Owen as well as A-list producers to create these 5 short films that showcased BMW cars as supporting actors in dramatic plots. These films neglected the BMW customer profile while concurrently attracting the younger potential consumers. While this was effective in increasing share of mind in the youth, it did not focus on maintaining the current BMW consumer. Additionally, these films came at a great cost to BMW, spending approximately $15 million on the films, which comes out to about 25% of their media-spending budget. And...
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...Motor Begin New Pricing Strategy Price is not just a number on a tag. It means everything to a manufacture like Ford Motor, because price is related to Ford's income, cost, revenue, employee benefit and etc. Price is the only one element of the marketing mix that produces revenue; the other elements produce costs. Ford Motor must understand making a proper pricing strategy is very important. The relationship between price and demand is the higher the price, the lower the demand. As we all known, automotive market is price sensitivity, because automotive is expensive for most customer, customers are less price sensitive to low-cost items. The higher the elasticity, the greater the volume growth resulting from a 1 percent price reduction. If demand is elastic, sellers will consider lowering the price. A lower price will produce ,ore total revenue. Throughout most of history, prices were set by negotiation between buyers and sellers. But in 21 centre there are many types of pricing strategies that can be used for a certain product or service. First is 'premium pricing' that uses high price and uniqueness within a product or service. Second is 'penetration pricing' wherein prices are artificially low in order to gain market share. Third is 'economy pricing' wherein the cost of marketing and manufacturing are both kept low. Fourth is 'price skimming' wherein there is high price for a substantial competitive advantage. Fifth is 'optional product pricing' wherein the initial...
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...In a basic principle of efficient road user charging the user must be charged for all the additional costs, because they imposed by their used of the road system. Marginal external cost is an additional cost while marginal social cost are cost its borne directly by the user. This principle that all costs are valued at the compensation that needed to those willing to do. They have two main constraints in the development of road user charging the technical and economic. Charging has two form the Fuel duty and Vehicle excise duty. Efficient prices (MSC- MARGINAL SOCIAL COST CONCEPT). Have two concepts: SHORT RUN which pricing translates into, in terms of road pricing, is a need to measure three components of cost. The first is the cost imposed...
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...Miščančuk Student: Andreja Andraši (1791/601) Varaždin, 09.04.2010. Varaždin, 09.04.2010. 2 Table of content 3 1. The 4 P's of Marketing in general 4 2. The Marketing Mix 4 2.1. Product Decisions 5 2.1.1. The Product Life Cycle (PLC) 6 2.1.1.1. Introduction 7 2.1.1.2. Growth 7 2.1.1.3. Maturity 7 2.1.1.4. Decline 7 2.1.2. Problems with Product Life Cycle 7 2.1.3. The Customer Life Cycle (CLC) 8 2.2. Price Decisions 8 2.2.1. Pricing Strategies 9 2.2.1.1. Premium Pricing 9 2.2.1.2. Penetration Pricing 9 2.2.1.3. Economy Pricing 9 2.2.1.3. Price Skimming 10 2.2.1.4. Psychological Pricing 10 2.2.1.5. Product Line Pricing 10 2.2.1.6. Optional Product Pricing 10 2.2.1.7. Captive Product Pricing 10 2.2.1.8. Product Bundle Pricing 10 2.2.1.9. Promotional Pricing 11 2.2.1.0. Geographical Pricing 11 2.2.1.1. Value Pricing 11 2.3. Place (Distribution) Decisions 11 2.3.1. Six basic 'channel' decisions 12 2.3.2. Selection Consideration - how do we decide upon a distributor 12 2.3.3. Types of Channel Intermediaries 13 2.4. Promotion Decisions 13 2.4.1. The Promotions Mix 14 2.4.1.1. Personal Selling 14 2.4.1.2. Sales Promotion 14 2.4.1.3. Public Relations (PR) 15 2.4.1.4. Direct Mail 15 2.4.1.5. Trade Fairs and Exhibitions 15 2.4.1.6. Advertising 15 2.4.1.7. Sponsorship 16 ...
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