General Pricing Approach - 1085 Words

4. General Pricing approach. Value based pricing, everyday low pricing (EDLP) and high-low pricing. Value based pricing Source:http://www.smallbusinessnotes.com/operating/marketing/pricing/valuebased.htmlHow high can a price be before the product or service is priced out of the market?To understand the customer s perception of the value of your product or service, look at more subjective criteria such as customer preferences, product benefits, convenience, product quality, company image and alternative products offered by the competition. * How do your customers describe what they get for their money? * Do they save a great deal of money or time by purchasing your product or service? * Do they gain a competitive advantage from†¦show more content†¦1. What type of market are you in? Only retailers that offer similar products and are in competitive markets are forced to make this discounting strategy choice. For example, pricing is a key differentiator of retailers selling homogenous products – price is important in a market where two similar grocery stores, located a mile or two a part, sell the same products. Retailers in this market environment have to adopt an EDLP or Hi-Lo pricing strategy. In contrast, Whole Foods (or as my sister prefers to call it, â€Å"Whole Paycheck†) offers a differentiated product (natural and organic foods). And while Whole Foods runs occasional specials, discounting is not a primary component of its retail strategy. 2. Are your customers price sensitive? Convenience stores like 7-Eleven, even those located close to discount grocery stores (selling the same products at a significant discount), often cater to less price sensitive customers. If your customers are not price sensitive, there’s less of a need to adopt an EDLP or Hi-Lo pricing strategy. 3. Do you have a cost advantage? If you are going with an EDLP strategy, it’d be helpful to posses a cost advantage. There should be a measurable difference between your EDLP price and a Hi-Lo retailer’s â€Å"Hi† price. Wal-Mart is a classic exam ple of a retailer with lower costs relative to its competitors. 4. Who are your customers? Are yourShow MoreRelatedSwot Analysis : Pricing Decisions1088 Words   |  5 PagesPricing †¢ Reports used for pricing decisions were, market update, industry outlook, pricing report, conjoint analysis, test market, decision criteria, tradeoff report and mfr. sales report †¢ Customer willingness to pay was crucial in the decision making †¢ For Allround, after period 1, it was decided to keep the price constant at $5.49 based on customer perception and the conjoint analysis. Also, during initial replays, effort to increase the price resulted in significant dip in net income and stockRead MoreEvaluation of Various Numerical Methods for Option Pricing Model638 Words   |  3 Pagesadvantage of the other. Hence, numerical methods are needed for pricing options in cases where analytic solutions are either unavailable or not easily computable. The subject of numerical methods in option pricing is very broad. A wide range of contracts exist and in many cases several models can be applied in the valuation. Although the option valuation has been studied at least since nineteenth century, the contemporary approach is based on the Black-Scholes model which was first published inRead MorePricing Strategies of Itc1297 Words   |  6 PagesPricing Strategy ITC Foods Business Division (Staples) The FMCG RETAIL Pricing Strategy UNDERSTANDING THE PROCESS FMCG Pricing Strategy is now a critical element of the management mix. Old school management responsibilities of Sales owning the trade spend budget and customer negotiations with marketing owning the Recommend Retail Price do not work in today s information driven age. Retail sales volume is now 80% controlled by 2-3 chains with a scatteringRead MoreChoosing the Wrong Pricing Strategy1677 Words   |  7 PagesChoosing the Wrong Pricing Strategy Can Be a Costly Mistake: Knowledge@Wharton (http://knowledge.wharton.upenn.edu/article.cfm?articleid=792) Choosing the Wrong Pricing Strategy Can Be a Costly Mistake Published : June 04, 2003 in Knowledge@Wharton Prices have been at the center of human interaction ever since traders in ancient Mesopotamia -- our modern-day Iraq -- began keeping records. Who doesn’t love to guess what something costs – or argue about what something ought to cost? So itRead MoreManagement Accounting - Setting Prices1709 Words   |  7 Pagesmajor influences on pricing decisions Customer Demand: the demands of customers are of paramount importance in all phases of business operations, from the design of a product to the setting of its price. Product-design issues and pricing considerations are interrelated, so they must be examined simultaneously. For example, for a higher quality product; you need higher quality materials which will affect a higher cost and needs more time and this will lead to a higher pricing on a product. AlsoRead MoreCase Study : Hospitality And Tourism Management1255 Words   |  6 Pages Zhen, Emily Hospitality Tourism Management Sales Marketing Pricing Utilizing Distribution Channels The key external areas crucial in pricing decisions not only include different types of markets, consumer price sensitivity, and pricing strategies driven by consumers and competitors, but other important economic variables as well. A market characterized by monopolistic competition leaves companies more or less a monopolistic power advantage for every company has the freedomRead MoreCase Study Silvio Napoli at Schindler India (a) Essay918 Words   |  4 Pagesin assigning Silvio as general manager of India? I do not believe Schindler made the right choice in assigning Silvio as the general manager of India. Silvio had little to no real world international experience. Silvio had much success in Sweden but there are several factors that limited his success in India. Silvio had high warrior and low monk attributes. Silvio was a task oriented individual. This management style is not well received in India. The General Manager needed to be a personRead MoreTechnical Evaluations and Competitive Pricing1467 Words   |  6 Pagesevaluations help to ensure the integrity of the contract bid process as well as the achievement of optimal efficiency, thereby resulting in fair and equitable outcomes (Levin-Waldman, 2000). b. The factors used to determine the competitive range. Some general factors that can be used to determine the competitive range of bids for this project include the following: Evidence of direct head-to-head competition between the seller and competing unaffiliated suppliers in either a formal solicitation or inRead MoreGibson Insurance Company1342 Words   |  6 Pagesreal cost by support activities. Moreover, when the sales volume had increased, the profitability declined. The managers are considered the prices are set improper or costs are out of control. Management is looking for a better solution for solving pricing and support costs allocation. Therefore, the controller of Gibson, Rebecca Hampton, is asked to investigate these issues and has to figure out a better strategy for improving cost allocations. 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