...Intelligent pricing is one of the most important elements of any successful business venture. Yet many entrepreneurs fail to educate themselves adequately about various pricing components and strategies before launching a new business. Smart small business owners will weigh many marketplace factors before setting prices for their goods and services. As the Small Business Administration (SBA) indicated in The Facts About Pricing Your Products and Services, "you must understand your market, distribution costs, and competition. Remember, the marketplace responds rapidly to technological advances and international competition. You must keep abreast of the factors that affect pricing and be ready to adjust quickly." Cost Factors and Pricing There are three primary cost factors that need to be considered by small businesses when determining the prices that they charge for their goods or services. After all, price alone means little if it is not figured within the context of operating costs. A company may be able to command a hefty price for an item, only to find that the various costs of producing and delivering that item eliminate most or all of the profit that it realizes on the sale. It should also be noted that service businesses often find it more difficult to accurately gauge their costs, especially in the realm of employee hours. A freelance copyeditor may find that one 2,500-word article takes twice as long to complete as another article of the same size because of differences...
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...Pricing as an Element of the Marketing Mix THE COMMERCIAL EXCHANGE Although people often think of marketing as synonymous with advertising or salesmanship, it is actually much broader. Marketing consists of the full range of activities involved in facilitating commercial exchanges and having all of these activities be guided by a concern for customer needs. The central idea here is that of the commercial exchange (see Figure 1.1). This is where a seller provides a product to a buyer in return for something in exchange (usually an amount of money). The product could be something tangible, which is referred to as a good, or the product could be the result of human or mechanical effort, which is referred to as a service. The buyer could be a consumer - an individual who purchases a product for his or her own use - or the buyer could be a business customer - an individual or group who purchases the product in order to resell it or for other business purposes. One aspect that makes the commercial exchange a very important idea is that it describes an interaction that is voluntary. Both the buyer and seller participate in the exchange voluntarily because the exchange will lead them both to be better off. For example, consider the vendor in the street selling Chocolates. You pay in your money and get a large package of M&M’s. You do that voluntarily because you would rather have the bag of candy than the money. On the other hand, the Mars company, which produces M&M’s...
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...ABSTARCT Marketing is the process of planning and executing the concepts of pricing, promotion and distribution of ideas, goods and services that satisfy individual and organizational goals (AMA). Successful marketing requires a winning strategy. Understanding marketing strategy formulation lets you properly evaluate your organization's marketing needs. You can then gear your marketing strategies to achieve maximum effectiveness. Marketing strategy formulation is the process of defining an organization's marketing goals and objectives. This allows formulators to create a guide. They examine the market and in doing so, use that information to determine what marketing approaches will be best at reaching clients and enticing them to seek out the business' services. Products and services constitute the platform for attracting customers, basically all organizations are in the business of attracting customers. Hence, the need to compete favourably. As a general rule, a good first step in a marketing strategy formulation is determining what you want to accomplish in terms of marketing. It could be as simple as letting potential customers know what you sell, and how your product can benefit them.The next step is to examine internal and external trends. These could include spreading the word about a next-generation version of one of your products (internal), and how it improves upon other products in the industry (external). After that, assign a value to the strategy's outcome...
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...Marketing strategy and pricing strategy of BMW Published: 23, March 2015 2. INTRODUCTION AND SCOPE OF THE PROJECT The topic that has been chosen for the project is related to the car industry i.e. to research the business strategies of BMW. BMW is the leading premium car manufacturer in the world. The report will look at the current business strategy that BMW adopts and also the future strategy of BMW Group. Business strategy has been defined by Johnson, Scholes & Whittington in their book "Exploring Corporate Strategy" as "a strategy that is concerned with how a business competes successfully in a particular market. It concerns strategic decisions about choice of products, meeting needs of customers, gaining advantage over competitors, exploiting or creating new opportunities etc." In this project, the author will research the marketing and pricing strategies of BMW Group. Also the markets BMW target and how BMW group as an automobile industry faced the recession period. The project will also look at the growing competition in the automobile industry and the major competitors for BMW Group. The marketing strategy of BMW Group will include their segmentation, target markets, marketing mix and by using SWOT analysis, the author will describe the advantages and benefits it is delivering to its customers and also its disadvantages. The pricing strategy of BMW will also be described. BMW adopts a differentiated strategy so the author will describe how it affects the...
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...INFORMS Supermarket Pricing Strategies Department of Economics, Duke University, Durham, North Carolina 27708, paul.ellickson@duke.edu William E. Simon School of Business Administration, University of Rochester, Rochester, New York 14627, misra@simon.rochester.edu Paul B. Ellickson Sanjog Misra M ost supermarket firms choose to position themselves by offering either everyday low prices (EDLP) across several items or offering temporary price reductions (promotions) on a limited range of items. While this choice has been addressed from a theoretical perspective in both the marketing and economic literature, relatively little is known about how these decisions are made in practice, especially within a competitive environment. This paper exploits a unique store level data set consisting of every supermarket operating in the United States in 1998. For each of these stores, we observe the pricing strategy the firm has chosen to follow, as reported by the firm itself. Using a system of simultaneous discrete choice models, we estimate each store’s choice of pricing strategy as a static discrete game of incomplete information. In contrast to the predictions of the theoretical literature, we find strong evidence that firms cluster by strategy by choosing actions that agree with those of its rivals. We also find a significant impact of various demographic and store/chain characteristics, providing some qualified support for several specific predictions from marketing theory. Key words: EDLP;...
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...Strategic Transfer Pricing Author(s): Michael Alles and Srikant Datar Source: Management Science, Vol. 44, No. 4 (Apr., 1998), pp. 451-461 Published by: INFORMS Stable URL: http://www.jstor.org/stable/2634608 . Accessed: 15/08/2011 07:30 Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org. INFORMS is collaborating with JSTOR to digitize, preserve and extend access to Management Science. http://www.jstor.org Strategic Transfer Pricing Michael Alles * Srikant Datar CBA 4M-202, University of Texas at Austin, Austin, Texas 78712 HarvardBusiness School,Accounting and ControlArea, Soldier'sField, Boston,Massachusetts02163 M\ost research into cost systems has focused on their motivational implications. This paper , takes a different approach, by developing a model where two oligopolistic firms strategically select their cost-based transfer prices. Duopoly models frequently assume that firms game on their choice of prices. Product prices, however, are ultimately based on the firms' transfer prices that communicate manufacturing...
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...Chapter 14 Managing Pricing Decisions Price is a core component of value. Value: ratio of the bundle of benefits a customer receives from an offering compared to the costs incurred by the customer in acquiring that bundle of benefits. Price or more specifically the customer’s perception the offering’s pricing – is a key determinant of perceived value. Elements of managing pricing decisions 1. Establish pricing objectives and related strategies 2. Select pricing tactics 3. Set the exact price 4. Determine Channel discounts and allowances 5. Execute price changes 6. Understand Legal considerations in pricing Establish pricing objectives and related strategies * Pricing objectives are the desired or expected result associated with a pricing strategy. Pricing objectives must be consistent with other marketing-related objectives as well as with the firm’s overall objectives for doing business. * Penetration pricing is a strategy adopted for quickly achieving a high volume of sales and deep market penetration of a new product. Under this approach, a product is widely promoted and its introductory price is kept comparatively low. * Price skimming: a product pricing strategy by which a firm charges the highest initial price that customers will pay. As the demand of the first customers is satisfied, the firm lowers the price to attract another, more price-sensitive segment. * Profit Maximization and Target ROI is the...
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...& ONTIME RECORDS NOW, LET US LOOK AT HOW IT IS BUILT UP & DELIVERED BUSINESS MODEL GENERIC • ASSET MODEL (LIGHT/ HEAVY) • INVESTMENT • OWNERSHIP • MANAGEMENT STYLE CAPITAL & GOVERNANCE SUPPLY & DELIVERY PRODUCTION • VOLUME /QUALITY • IN-HOUSE/ OUTSOURCE • PLANT, PROPERTY & EQUIPMENT • HR PRACTICES • COST CONTAINMENT PRICING & PROMOTION • SUPPLY CHAIN CONFIGURATION • CHANNELS • DISTRIBUTION METHOD • MARKETING • • • • 5|2 PRICING POLICY REVENUE & MARGINS MARKETING CUSTOMER SATISFACTION & RETENTION XIAMEN AIR INFERRED MODEL • INVESTMENT IN 737-800 • EMPHASIS ON QUALITY IN HR PRACTICES » SAFEST • SUBSIDIARY OF C.S.A » BUT CSA MAKES NO DIRECT INVESTMENT CAPITAL & GOVERNANCE SUPPLY & DELIVERY PRODUCTION PRICING & PROMOTION • ROUTES AND INTERCONNECTIONS • SOME REGIONAL (ASIAN) ROUTES •HIGHER PRICING POLICY IMPACT ON REVENUES / ASK (YIELD) •MARKETING •CUSTOMER SATISFACTION & RETENTION 5|3 XIAMEN AIR DIFFERENTIATION SKIPPING THE SWOT FOR THE MOMENT SINCE COMPETITORS LIKE TRAINS, OTHER AIRLINES MACRO FACTORS SUCH AS FLOOR PRICING POLICY, STAKEHOLDERS OF GOVERNMENT ETC INCREASING COMPETITION BETWEEN PROVINCES & CITIES AND INCREASING NEED FOR REVENUE MANAGEMENT & WITHIN LIMITED SPHERE OF ACTION DUE TO CAPITAL CONSTRAINTS AND RUNNING AS A SUBSIDIARY OF A POTENTIAL COMPETITOR ARE SELF-EVIDENT XIAMEN AIR DIFFERENTIATION QUESTION: (A) WOULD DREAMLINER HELP...
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...The theory of customer service is based on identifying and satisfying your customers' needs and exceeding their expectations. A company must be totally committed to delivering consistently high standards of service to gain and retain customer loyalty. Everyone from top management on down must be tuned into what the customer wants. Creating a customer service culture within a company can help build success. Customer satisfaction and loyalty are inextricably linked to the quality of customer service and, ultimately, to the company’s profitability. The customer plan is well-found with perception of Vision and Mission of Internal and External Customers. According to (Chris Adalikwu,(2012) Mission Statement The mission of Cree’s Customer Service function is to always convey a passion for the customer and to consistently deliver the best service experience. Statement of Work Customer Service is any activity provided by a Cree employee that enhances the ability of a customer to realize the full potential value of a Cree product or service before and after the sale is made, thereby leading to Customer Satisfaction and repurchase. Customer Service Principles * Recognize the importance of all customers and the role every Cree employee plays in influencing the customer's perceptions. While impacting these perceptions, be professional, reliable, credible, responsive and friendly. * Communicate promptly and honestly and via the customers’ choice of medium. Try to be brief and...
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...was estimated to be two years away2, but this could change as the approval process is inherently complex and uncertain. The main problem Biopure faced was whether to launch Oxyglobin now, or wait until Hemopure was approved and launch both products simultaneously. This was a complex problem as the early launch of Oxyglobin would have both positive and negative repercussions for Biopure. These repercussions needed to be carefully analysed in order to decide what the best course of action is. Another problem was that Biopure had competitors with similar human blood substitute products in the pipeline 3 . Biopure have to consider how to position and price their products in relation to their competitors. An additional problem exists in the pricing of Oxyglobin and Hemopure in order to appeal to their respective markets4. Lastly, Biopure has no current cashflow and therefore needs to be successful with its upcoming IPO in order to raise the requisite cash and solidify its future5. Analysis Human blood is an extremely important commodity as it is used for blood transfusion procedures. However, blood collection is becoming increasingly difficult because donor rates are falling and a lot of collected blood is being discarded due to contamination or expiry6. Biopure identified a need for a “blood substitute” product which would provide the following benefits7: 1) eliminate the need for...
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...The development of a new product was much lengthier and more expensive than the company's management anticipated. Consequently, the firm's top accountants and financial managers argue that the firm should raise the price of the product 10 percent above its original target to help recoup some of these costs. Does such a strategy make sense? Explain carefully Answer: First, it’s necessary to define “product development” – It is the term used to describe complete process bringing a new product (a set of benefits offered for exchange and can be tangible or intangible) to market. The development of a new product can sometimes be lengthier and more expensive than originally planned but companies should be much prepared for this. Some companies in trying to guard against this adopt different strategies to either mitigate the loss or recoup some of the cost. Some, as we have in our assignment try to increase the price of the product. But is this the right strategy. How helpful or sound is this sort of strategy? Often times a firm’s growth potential lies in its ability to develop and market additional products that fulfil a specific, unmet need while still remaining focused on its core value proposition. In order to develop and launch a new product successfully, a well executed strategy is essential. It is important to create a system to keep everyone on the same page throughout the process so information is dispersed accurately. While a company can be understandably anxious to...
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...Introduction 1.0 The Company Background 18 years ago, Senheng managing director Lim Kim Heng with his wife and his two brothers contribute RM90, 000 of capital to start operate their first home appliance business. After they run their business on first 7month, they have earn some profit out of their expectation, therefore they can opened second branch at other area. However, Lim Kim Heng would like to upgrade the business level of his company, so he go to aboard to observe the foreign company and try to carries on the foreign business principle in his own company. Finally he successful to help the company earn the 3million 7 thousand and he expected year of 2009 will increase their profit to 10million. “The future expansion strategy will include improving the competitiveness of existing store to expand the number of outlet from the current 82 until 100,” Lee Kim Heng. 1.1 The Nature of Business SenHeng Sdn Bhd is the retailer of provide the variety home appliance which is consumer electronic items, communication equipment, computer and Accessories. Therefore, Senheng as a role of the middlemen, deliver the product from the supplier to customer. For the previous time, the price oriented is one of the important strategies for the retailer business. In the retailer industry, they will competing with the competitor price, because all the retailer also agree that cheaper price will attract a lot of new customer come to purchases their product. Moreover...
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...and cost figures. Please be aware of the influence of unreliable cost and revenue data in regards to the pricing, production, and marketing recommendations presented in this study. However, it must also be noted that many of the discrepancies are legitimate differences in data collection methods and tests used in the case. Introduction Cumberland Metals faced a both a pricing and channel marketing decision for metal pile cushions utilized during pile driving. Cumberland’s approach to pile cushions had significant efficiency advantages over other asbestos methods that were currently available in the 1979 market. However, Cumberland faced several barriers to entry into the pile cushion market. The primary barrier was that most companies viewed role of cushions as a necessary accessory or tangent item instead of viewing cushions as a potentially value adding or cost reducing part of pile driving. In order to penetrate the market, Cumberland would have to alter the lackadaisical view of pile driving cushion pads for the opinion leaders, engineering firms, and contractors involved in the decision process. Key Stakeholders There were several stakeholders in the both in the pile driving industry and within Cumberland Metals. First, Cumberland Metals and the welfare of its employees were major stakeholders in the pile driving cushion pricing...
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...apparel-based specialty retailer to a segment leader focused on women's intimate and other apparel, personal care and beauty categories that make customers feel sexy, sophisticated and forever young. L Brands sells its merchandise through specialty retail stores in the United States and Canada, which are primarily mall-based, and through websites, catalogue and international franchise, license and wholesale partners. L Brands is committed to building a family of the world's best fashion retail brands, offering captivating customer experiences that drive long-term loyalty. Under the continued leadership of founder Mr. Wexner, chairman and chief executive officer, L Brands employs nearly 100,000 associates. Pricing Strategy Victoria’s Secret implements a high-low or promotional pricing strategy. The brand sets a first price that is not outrageously high; however, it allows for plenty of room to allow for markdowns. Permanent markdowns are rare as there is generally only a small clearance area in each store. Instead, Victoria’s Secret utilizes many temporary markdowns through promotions like 5 for $25 panties and holiday sales. Customer Analysis Victoria’s Secret target customers are women between the ages of 18 and 49 who want to own fashionable undergarments and lingerie. 44 percent of Victoria’s Secret customers are between the ages of 18 and 34. The majority of Victoria’s Secret shoppers, 75 percent, are Caucasian, while only 5 percent are Asian and 8 percent are African American...
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...Marketing 635 MARKETING ANALYTICS AND PRICING Fall 2015 MW 9:35-10:50 – WCBA 184 Instructor: Office: Office Hours: Office Phone: E-mail: Website: Dr. Yan Liu 220U Wehner Building by appointment 845-2547** yliu@mays.tamu.edu https://elearning.tamu.edu **Outside of the classroom, my preferred method of communication is via e-mail. Please note that I will often use e-mail to communicate with you class information. I will send these messages to your neo email account, so please check this account on a regular basis. Required Materials (1) Text Book (2) Nagle, Thomas T., John E. Hogan and Joseph Zale, the Strategy and Tactics of Pricing, Fifth Edition, Pearson-Prentice Hall, Upper Saddle River, NJ. Packet of Cases and Readings. (https://cb.hbsp.harvard.edu/cbmp/access/38228396) Click the link above and set up a HBP account as a student if you don’t have one.(you can use any email address, not necessarily school email address) Choose coursepack mktg653 and make the purchase (audio version of the cases are optional). You have one-year access to this online course pack. Please save the cases to your computer for future usage. Although you purchase digital version of the cases, you can print them out if you wish. Course Prerequisite Completed MKTG 625 Course Description This course is designed to introduce you to pricing fundamentals and pricing strategies. The course is quantitative in nature and will cover a number...
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