Category: Pricing Strategy

Suggested Retail Price and Volume Discounts

Experts would undoubtedly agree that pricing of a product is an art as well as a part of the scientific approach. And pricing is most probably the toughest decision taken by an organization because many believe that proper pricing can enhance the sales of a product. According to Ellickson, Misra, and Nair (2012), revenues received by a firm are conditional to a certain pricing strategy, so a firm must find some sources of independent variations that induce it to switch its pricing strategy and remain active in the market.

To estimate the product price of our product Allround we considered our target customers, competitors pricing, and product quality. The production costs and margin were also taken into account in deciding the manufacturer suggested retail price (MSRP) of the product. The important thing that needs to be considered is that the price of the product that would be paid by a consumer would depend on the promotional allowances and volume discounts apart from the manufacturing cost of the product.

In the period one, the simulation suggested a manufacturing cost of $1.24 and we decided to offer a plain 14% promotional allowances on the MSRP. For volume discounts, we specified four layers of the purchase order from the sales force agents, the layers of purchase order offer a volume discount from 25% to 40% on the MSRP. The respective volume discounts are 25% for less than 250 units, 30% for less than 2500 but more than 250 units, 35% for more than 2500 units, and wholesalers get 40% volume discounts, whereas our suggested MSRP was $5.29 for the period one.

In the period two, we experienced a little rise in the production cost due to inflation adjustments in the raw materials which have pushed the price to $1.27. Also we took a different strategy of promotional allowances. Instead of offering a flat promotional allowance we offered different promotional allowances for different sales force members: wholesale agents received 10%, department stores and chain drug stores  17%, grocery stores  14%, convenience stores  10%, and mass merch received 16% promotional allowance on the MSRP. Due to changing promotional allowance and an increased manufacturing cost, the suggested MSRP for period two was $5.59 while the volume discount remained unchanged.

During the period three, the cost of manufacturing went down to $1.2 and volume discounts remained the same. The promotional allowance was increased for department drug stores and chain drug stores to 19% and for grocery stores to 15% because of their improved sales performance. The dedicated performance of the sale force and active advertisement has increased the demand for the product Allround so it was decided to set the MSRP to $5.99.

In the fourth period, we introduced a new product Allround+ and also the regular Allround has been performing as it was expected. The manufacturing cost of Allround rose to $1.25, volume discounts for the product remained the same, promotional discounts were equal to the ones in the third period except for a reduced allowance of 12% for mass merch, and the suggested MSRP remained $5.99. And for the new product Allround+ the manufacturing cost was $1.09 with the same promotional allowances and volume discounts for the respective sales force agents; the suggested MSRP for the product was $5.29.

In the fifth period, both the product was performing better without any significant sign of changing the current pricing strategies, so it was decided not to change anything. The suggested price for both the products remained the same ($5.99 & $.5.29), also the offered promotional allowance and volume discounts equaled to the ones in the last period, except for slight changes in the manufacturing costs (Allround =$1.31, Allround+ = $1.13).

In the sixth period, a new product called Alright was introduced while the other two products were performing as it was expected. The new products manufacturing cost was $2.04 and we suggested a MSRP of $5.69. No changes in the promotional allowances and in the volume discounts were made in the period, but the inflation adjustment has increased the production cost for Allround ($1.35) and Allround+ ($1.17). The suggested price for both products remained the same for the period.

For the periods Seven, Eight, and Nine all three products of the company were following a standard pricing strategy that we have set before. The strategy is to follow the promotional allowance of 10%, 19%, 19%, 19%, 10%, 12% respectively for whole sellers, department drug stores, chain drug stores, groceries, and mass march. Also, volume discounts (25% to 40%) were offered for the sales force agents in four different layers of order amount. Considering all the elements of product pricing we suggested a profitable MSRP for our sales agents: Allround  $5.99, Allround+  $5.29, and Allstar  $5.69.

The results of the pricing strategies suggest that it had a positive impact on the sales improvements, which has initiated two more products to be launched in the subsequent periods. Also, the share price of the company would be a good indicator for measuring the strategic performance of the company. Moreover, the Salesforce agents had a strong support in increasing the sales, and as a result we had to adjust the promotional allowance for some of the sales force agents.

Promotional Budget and Allocation

For promoting the company products, we had to carefully consider different promotional activities both inhouse and outhouse. We allocated our promotional budgets in four different promotional activities which include cooperative advertising, product display, trial size, and coupons. Among these strategies cooperative advertisement can bring extra profits for manufacturer under certain conditions, and it occurs only when both manufacturer and retailer decide to play fairly (Yang, Xie, Dang, Xiong, 2013).

In the span of nine periods of our simulation activities, we had to increase our promotional budgets for the mentioned promotional strategies. Our promotional budgets increased by 297% (from 8.8 M$ to 33.4 M$) over the nine operational periods.

We have used trial and error strategies to determine the optimum level of promotional input for each mentioned strategy. At the very beginning we allocated the highest value (47.62%) to product display, then to cooperative advertisement (20.24%), the next strategy was the coupon (20.24%) and the least importance was given to the trial size (11.90%). During the next period we kept the same order of importance but increased the budget allocated to product display (51.14%) and co-op ad (23.86%) to see the changes in output.

As the strategy paid off it was decided to put more value to product display (53.41%) and kept cooperative advertisement allocation the same. The fourth and fifth period was not different to the previous strategy but here we increased coupon (16%) and kept product display around 50% while cooperative advertisement allocation was around 24%-25%. In the sixth period, we significantly decreased the allocation of product display (36%) and increased co-op (32%) while the coupon promotion was receiving 20% of the budget. The further strategy suggested that we increase cooperative advertisement as it had a significant impact on the sales.

Thus, we increased the co-op advertisement budget to 40% keeping the product display at 36% and reduced the coupon-production to 14% which resulted in the best possible outcome. It was finally decided to follow the budget allocation of cooperative advertisement the highest (40.42%), followed by product display (36.53%), then coupon promotion (14.07%), and the least amount (8.98%) was allocated to the strategy of trial size.

References

Ellickson, P. B., Misra, S., & Nair, H. S. (2012). Repositioning dynamics and pricing strategy. Journal of Marketing Research, 49(6), 750-772. Web.

Yang, J., Xie, J., Deng, X., & Xiong, H. (2013). Cooperative advertising in a distribution channel with fairness concerns. European Journal of Operational Research, 227(2), 401-407. Web.

Summary of the Case

The Art Gallery is experiencing financial problems and the financial controller feels that something should be done to increase revenue flow. As a curator responsible for determining the price charged for the admissions, it is necessary to come up with an appropriate way of adjusting the price to increase the revenue. The first option is to increase the price of admission. However, this can only achieve the desired result if it is determined that the demand curve is inelastic. This would mean that the number of visitors will not change due to the price increase. The second option may be to lower the price. This strategy will be appropriate if the demand curve is elastic. In such cases, more visitors will be attracted to the firm due to the reduced price of admissions.

Introduction about the Topic

According to McEachern, the elasticity of demand is one of the most important factors that firms have to consider when setting the price for their products (45). The best way of increasing revenues for a firm is to increase the number of clients purchasing a given product. There are products whose price would determine whether or not people will be interested in buying them. However, some products would always be purchased irrespective of the changes in their prices. A firm must understand the elasticity of the products they offer before setting the desired price. In this case, the focus was to determine the right pricing strategy that would help increase the revenues at the Art Gallery.

Analysis of the case

This case presents a typical pricing problem that many firms always face in the market as they try to increase the revenues. At the Art Gallery, the focus is to increase revenues by coming up with the right pricing mechanism. The curator has to make a decision that will not worsen the current financial situation. If the curator increases the price, the revenue may increase in case the current number of visitors will remain unchanged.

However, the price increase may significantly reduce the number of visitors to an extent that the revenues may go down further (Ringel 56). If the curator chooses to go for the second alternative of lowering the price of admission, then the revenue to the firm will increase in case the number of visitors shall be considerably increased. However, if the decrease in price does not have a considerable impact on the number of visitors coming to the firm, then the revenue will be reduced. This is a delicate situation that requires comprehensive knowledge about the responsiveness of the demand for changes made on the product price. It means that thorough research may be necessary to review the past trends in pricing and the response from the customers.

Reviewing the records to determine the trend in visitors admissions based on changes in pricing will be the first step taken by the curator to solve this problem. After determining the responsiveness of demand to changes in product price based on past trends, the curator should interview the clients to determine if their purchasing patterns may be affected by changes in product pricing (Hirschey 32).

This interview will help confirm the findings from the records of the firm about the elasticity of demand for the product. Finally, it will be necessary to review the market price for similar products offered by other competitors in the same region. Significant changes in product price may trigger price wars in the market that may worsen the current financial problems of the firm. All three factors should be taken into consideration when deciding how to solve the problem.

Conclusion

This case study presents one of the common problems that many firms face when setting their product prices. Sometimes a firm may lower its product prices hoping that this would attract more customers. However, if the demand curve is inelastic, such moves may only harm the finances of a firm because it will not increase the number of customers. On the other hand, a firm may increase product prices hoping to increase revenues only to drive away most of its current customers. The right information is, therefore, critical before coming up with the right pricing strategy.

Works Cited

Hirschey, Mark. Fundamentals of Managerial Economics. Mason: South-Western/Cengage Learning, 2009. Print.

McEachern, William. Microeconomics: A Contemporary Introduction. Mason: South-Western Cengage Learning, 2012. Print.

Ringel, Jeanne. The Elasticity of Demand for Health Care: A Review of the Literature and Its Application to the Military Health System. Santa Monica: RAND, 2011. Print.

Introduction

Topshop is a private limited entity which operates within the UK retail and fashion industry. The firm was established in 1964 and its headquarters are situated at London, UK. In its operation the firm deals with provision of a variety of apparels such as footwear, makeup, shoes and accessories (Yahoo Finance 2012).

To attain an optimal market position, Topshop has incorporated a unique strategy which entails product differentiation. The firm has achieved this by integrating the concept of exclusivity and uniqueness. Topshop achieves this by engaging in innovative and creative designing.

As a result, Topshop is able to develop fashion products which are sufficiently differentiated. Its differentiation effectiveness has enabled Topshop to attain an optimal market position in the fashion industry despite the intense competition from firms such as ZARA and H&M. Additionally, commitment to innovation and creativity has enabled Topshop to align itself with changes in the fashion industry (Yahoo Finance 2012).

In an effort to understand the external and internal environment with regard to Topshop, this paper details a comprehensive market audit of the firm. The audit is undertaken by incorporating macro and micro environment analysis models such as the PESTLE analysis, the Porters five forces and the SWOT analysis. An internal analysis of the firm is also conducted by evaluating the marketing mix strategies adopted by the firm.

Marketing mix

The success of a firm in marketing its products and services is dependent on the effectiveness with which it has incorporated its marketing strategies (Kotter & Schlesinger 2008).The marketing strategies have to take into account a number of variables such as the product, promotion, price and distribution.

Product strategy

Topshop has incorporated product diversification as its product strategy. The firm deals in product lines which are composed of a wide range of apparels and accessories in accordance with the customers needs. In its operation, Topshop is focused at ensuring that its products are of high quality, style and convenience. Some of the firms main product lines include mainline, boutique, and unique (Topshop 2012).

One of the main challenges in the apparels industry emanates from its dynamic nature. The rate of change in the industry is very high. To cope with this issue, Topshop is focused at attaining a high level of creativity and innovation. This has significantly contributed towards the firms capability in introducing new products to the market.

To ensure that the value of its products is not diluted by over-introduction of new products, Topship ensures that only a few pieces of a particular product line are introduced. For example, the firm may only introduce only 300 pieces of a new product which are stocked in specific flagship stores. This strategy is unique in that it contributes towards positioning its products being exclusive, prestigious and scarce (Topshop 2012).

Pricing strategy

In their purchasing process, consumers are very conscious of product prices. Firms use pricing strategy to communicate the value of their product. In its marketing process, Topshop has adopted premium pricing strategy. The strategy is aimed at communicating the high quality of the firms apparels and accessories.

Over the years, customers have associated Topshops products with value. This has played an important role in the firms effort to incorporate premium pricing. Topshops premium pricing strategy has succeeded as a result of the unique nature and high quality of its products.

Promotion strategy

Creating sufficient market awareness is one of Topshops goal marketing objectives. To achieve this, Topshop has adopted Integrated Marketing Communication (IMC) strategy. The strategy is constituted of various marketing communication techniques such as advertising, sales promotion and public relations.

In its advertising strategy, Topshop uses both emerging and traditional marketing communication mediums such as print media. For example, when introducing new products to the market, the firm advertises through mediums such as the local dailies in the UK.

Additionally, Topshop also engages in outdoor advertising for example by decorating its vans with its products and unique messages aimed at creating market awareness. Below is an example of some of the firms that the firm utilizes.

To create a strong brand relationship, Topshop contracts renowned celebrities to endorse its products. When opening its stores in New York, Topshop contracted Kate Moss, a renowned British model, Jennifer Lopez and Jay Z [renowned music artists] to attend the grand opening (Topshop 2012). Their attendance presented an opportunity for the firm to create market awareness. This is due to the fact that the media would sufficiently publicize the event hence creating brand awareness.

Topshops management team appreciates the role of information communication technologies in creating market awareness. Consequently, the firm has designed an official website through which it posts its products. Additionally, Topshop also promotes its products through emerging social communication networks such as Facebook. By using social networking sites, Topshop has successfully created a sufficient online community.

Distribution strategy

Upon developing products and services, it is paramount for firms to ensure that customers easily access them. Firms achieve this achieve this by incorporating both direct and indirect distribution methods. Topshop has established a number of outlets in the UK to enhance product accessibility.

The outlets are effectively positioned to improve customer accessibility. Topshop has also adopted online marketing. Customers can be able to purchase Topshops products online. Online distribution has been effective in ensuring that Topshop markets its products to a wide number of potential customers.

Market Environment Analysis

Macro-environment analysis

Firms do not operate in a vacuum but are affected by changes occurring in the macro-environment. Some of the macro-environment factors affecting firms operation include political, economic, technological, social, and legal factors

PESTLE analysis of the UK Apparels and accessories industry

Political environment

Over the past decades, the UK government has ensured a high level of political stability. This has played a critical role in promoting investment within the country. Most investors are increasingly considering investing in the UK.

The countrys political stability has enabled the UK to be a member of different trading blocs such as the European Union, the G-20 and the Organizational for Economic Co-operation Development. By being a member of such trading blocs, the UK government has been able to provide investors with an opportunity to market their products to a large number of customers. For example, firms such as Topshop can be able to export their products into the member states more cost effectively.

This is well illustrated by the fact that the UK has entered into free-trade agreements with other countries such as Norway, Liechtenstein and Switzerland. The economic integration between the UK and other countries presents an opportunity for Topshop to access raw materials member countries cost effectively.

Economic environment

The 2007/2008 global economic recession adversely affected most world economies as a result of the high rate of globalization that is currently being experienced (Gilligan and Hird 2008).

The UK was not shielded from the effects of the recession. Consequently, most economic sectors such as the apparels and accessories were adversely affected.

The UK has not fully recovered from the 2008 economic recession. The recession made most consumers to adjust their consumption behavior as a result of decline in their purchasing power. Decline in consumers purchasing power emanated from increment in the in the level of unemployment. Approximately 580,000 jobs were lost between 2008 and 2010 in the UK (Bell and Blanchflower 2010).

The recession has made consumers to increasingly focus on consumption of necessities rather than luxuries. During this period, a significant proportion of UK consumers considered fashion products such as apparels and other accessories as luxuries than necessities.

Currently, the firms operations will also be affected by the prevailing euro zone sovereign debt crisis. As a result of the crisis, the UK has experienced an increment in the rate of unemployment to 11.2% in 2012 (Cha 2012). It is estimated that the non-food retail sector in the UK will experience the lowest growth as a result of the recession. During 2012, the sector will decline with a margin of 0.5% (Verdict 2012).

The recession and the sovereign debt crisis have made consumers unable to purchase highly prices products such as fashion products (Verdict 2012). Therefore, there is a high probability of Topshop experiencing a decline in its sale revenue due to reduction in the consumers purchasing power. The economic recession has led to an increment in the degree of uncertainty amongst consumers. This is depicted by the rapid rate at which the consumers have reduced the rate of consumption (This Money 2012).

Social environment

Firms operations are affected by the prevailing social trends. Currently consumers have increasingly become conscious of fashion. This presents an opportunity for Topshop to exploit by designing high quality, unique and valuable fashion products. To align itself with the prevailing social trends with regard to fashion, Topshop undertakes extensive innovation and designing.

Technological environment

Topshop can benefit from the numerous innovations with regard to social networking technology. For example, the firm can exploit the social tools such as Facebook, Twitter, Tout and You Tube to interact with its customers. Through these social networking sites, the firm will be able to derive a sufficient volume of market information. Such information can be an important source of market intelligence for the firm.

Legal environment

Firstly, the government has eliminated all taxes on firms that venture in such zones. Additionally, the government issues a 5-year tax holiday to firms that invest in such zones. Incorporation of tax holidays has played a critical role in improving the attractiveness of the zones to investors. By investing in such economic zones, Topshop can be able to attain high profitability (Delloite 2011).

Competitive analysis: Porters five forces

Threat of entry

The UK high end retail market is characterized by a high threat of entry emanating from entry of large retail chains such as supermarkets. Supermarkets are increasingly diversifying their product range by including diverse apparels and accessories. This presents a major challenge for the firm (Key Note 2001).

The high rate of technological innovation especially the internet has made it possible for new entrants to venture the UK high end retail market. New entrants are using the internet to venture in the UK market by undertaking online marketing. To survive in an industry characterized by such a threat, it has become vital for Topshop to incorporate online marketing.

Threat of substitute

The large number of competitors in the UK fashion industry presents consumers with an opportunity to select from a wide range of products. During periods f economic recession consumers can easily access fashion products from supermarkets and other retail outlets.

Supplier bargaining power

The suppliers bargaining power is relatively low. Topshop mainly deals with its own branded apparels and accessories. Consequently, the firm is not mainly dependent on suppliers for its finished products. However, the firm outsources raw materials from different sources. For example, the firm accesses its supplies from different countries by importing. As a result of its global reputation, Topshop is able to negotiate for significant discounts.

Buyer bargaining power

The large number of industry players coupled with the fact that supermarkets are stocking diverse apparels has significantly increased the consumers bargaining power (Gilligan and Hird 2008). This arises from the fact that consumers can switch to other apparels and accessories product at a relatively low switching cost.

The high consumer bargaining power means that Topshop has to develop customer trust in order to sustain its sales growth. Additional, the firm has t ensure that it stocks high quality products. This will aid in developing the eve f customer loyalty. The figure below illustrates a summary the industrys characteristic.

Degree of rivalry The lucrative nature of the industry coupled with the large number of industry players has significantly increased the degree of rivalry in the UK fashion industry.

Micro-environment analysis: SWOT analysis of Topshop

The chart below illustrates Topshops, strengths, weaknesses, opportunities and threats.

Conclusion

From the above analysis, it is evident that Topshop has been very effective in its operation. Its success has arisen from adherence to quality, innovation, creativity and maintenance of product value. As a result, the firm has been able to attain a high level of customer satisfaction. Topshop has been successful in marketing its apparels and accessories products through formulation and implementation of effective marketing strategies.

As a result, the firm has been effective in positioning itself in the market. Despite this, the firm faces numerous challenges emanating from the external environment. To effectively position itself in the market, it is paramount for the firm to continuously conduct a comprehensive market audit. The audit will aid in formulation of effective marketing strategies thus enhancing its competitiveness.

Reference List

Bell, D. & Blanchflower, D. 2010, UK unemployment in the great recession. Web.

Cha, A. 2012, European financial crisis has ripple effect on US businesses. Web.

Delloitte: Taxation and investment in United Kingdom 2011. Web.

Grundy, T. 2006, Rethinking and re-inventing Michael Porters five forces model, Strategic Change, vol. 15, pp. 213-229.

Gilligan, C. & Hird, M. 2008, International marketing: strategy and management, Taylor and Francis, New York.

Key Note: UK clothing & footwear 2001 market review, 2001. Web.

Kotter, J. & Schlesinger, L. 2008, Choosing strategies for change, Harvard Business Review, vol. 2, pp. 130-150.

This Money: Moodys could downgrade UKs AAA credit rating in early 2013 if the economy fails to shape up. Web.

Topshop: Marketing: the Topshop way, 2012. Web.

Verdict: UK retail 2012 & beyond 2012. Web.

Yahoo Finance: Topshop company profile 2012. Web.

The introduction of the iPad to the market came at the backdrop of a successful launch of the iPhone. The iPhone was barely out of the introductory stage when the iPad 1 was launched. The second generation iPad has recently been launched. Sometimes it is hard to define the stage in product life cycle apple products are.

This is because their entry is characterized by huge success and massive reception by consumers. Experts note that it is possible to skip some stages in the product life cycle (Armstrong and Kotler, 2011). I would say that is what happened with iPad.

All characteristics surrounding the second generation iPad confirm the fact that it is at the introductory stage, apart from the massive consumer use it is already enjoying in the market. I would say it is in the growth stage. The marketing pricing strategies that Apple Inc should employ are not clear.

The market penetration pricing strategy, according to me is not a good option. This is because the market reception is already quite positive. Therefore, riding on this euphoria that has been generated by all the talk about the iPad, the company will recoup its investment quite fast.

The second generation iPad was launched in 25 other countries (apart from USA where it was originally launched) just last month (Apple Inc., 2011). Initial indications showed that those markets were waiting for the product to arrive. This means that no matter the price, consumers will focus on the value addition of iPad 1 (Satariano, 2011).

The other reason the company should not adopt the market penetration pricing strategy is that competition is almost nil. The most formidable competitor Motorola xoom is still in competition with iPad 1.

The CEO of Apple Inc Steve Jobs noted during the launch that competitors are struggling to catch up with the first generation iPad while the second generation is already launched. This underscores the variability that is there in market share with the closest competitor (Armstrong and Kotler, 2011).

The second generation iPad is an improvement to the iPad 1. This is terms of camera quality, sexiness, Wi Fi capabilities and horse power capabilities (Topolsky, 2011). These features are also way competitive compared to Motorola xoom. This means that majority of consumers will see xoom as just an imitation of the iPad. They will go original (Johnston, 2011).

Another reason is the fact that apple has had other successful launches before. The iPhone which entered the market in early 2007 received so much reception in the market. There was actually no competition for some time. Banking on that success, the company should simply introduce the product in the market at a high price. The target market can also be a determiner in overall pricing.

In this case it is evident that iPad is not meant for lower end market. It is for the high end market. This means that its price should be high. The company should listen to the consumers for improvements and value addition propositions (Armstrong and Kotler, 2011).

It is evident that my proposal is that Apple should employ market skimming pricing to introduce iPad. Because of the favorable past quality and successes of its products, it will easily recoup its costs and make profits. Afterwards it should shift to market penetration pricing strategies. This is what the company did when launching the iPhone in 2007. Focus, in the short run, should be awareness and value addition (Armstrong and Kotler, 2011).

Reference List

Apple Inc. (2011). Ipad 2 Arrives In 25 More Countries This Friday. Web.

Armstrong, G. & Kotler, P. (2011). Marketing: An Introduction. New York, USA: Pearson Prentice Hall.

Johnston, C. (2011). Ipad 2: Faster, Thinner, Lighter; Same Battery, Display Resolution. ARS. Web.

Satariano, A. (2011). Apple Poised To Sell 600,000 Ipad 2s in Its Debut, Outpacing First Model. Bloomberg. Web.

Topolsky, J. (2011). Ipad 2 Review. AOL Tech. Web.

Pricing strategy refers to the series of maneuvers that businessmen employ to arrive at the final price of a new product at the market.

In general, a business man should follow the following steps before settling down on the price of a commodity: come up with a marketing strategy, decide on the marketing mix, determine the demand versus price relationship, calculate the cost incurred, consider environmental factors, outline the pricing objectives and finally settle down on the cost of the commodity (Anon 2).

Putting into consideration a few examples, Tata, an Indian car company introduces the cheapest car in the market which after selling for a while undergoes a price hike. The company would have failed to maintain the cheap price due to various reasons. For instance, despite the cars cheap price, it did not realize market share maximization which was one of its targets since it sold just 45,000 in a country of over a billion people.

The company had considered some ethical issues before settling down on the price like excluding features that may raise the cost of production and setting the plant near the source of raw materials. However, low prices are usually prone to price wars and may be considered internationally as dumping.

Again, the Indian government initiative to develop the cheapest PC attracts so much debate from manufacturers. This goes hand in hand with the introduction of $35 tablet PC which appears to be impossible to many. Such initiatives may be successful since the government may subsidize the manufacturing cost in its efforts to make each of its citizens own a PC.

The government considers legal issues like subsidizing the cost for the benefit of their consumers, though it may raise questions from other manufactures. However, price standardization has not been accepted in many countries.

Automobile Sales

Examining the conversation between the three car dealers and the report thereafter, it is very clear to everyone that automobile prices have drastically gone down by a very high percentage compared to the previous years. Many programs have been put in place to have the prices cut by almost 40% that have seen all kinds of vehicles going at a lower price.

Apart from prices falling, car sales are not very good probably due to gas prices. However, quite a good number of people are targeting the collapse of the general motors hoping that this would cause the prices to fall even further.

Manufacturers have been employing various pricing strategies to ensure that despite the low prices and low sales, they still remain in the market and do not undergo losses. There are five pricing strategies that are evident in the automobiles industry which include price skimming, penetration pricing, experience curve pricing, complementary product pricing and break even pricing (Rao 15).

Price skimming involves setting initial prices very high to target those customers who are less sensitive and then gradually reducing the prices to have them fall even further. The referred articles show that automobile prices were higher in the previous years, have shoppers like Ousman who rarely bargains and also most people are waiting for General Motors to collapse hoping for even lower prices.

In penetration pricing, the dealers set lower prices to accelerate product adoption as we can see dealers hoping that customers will flock in the showrooms. Experience curve pricing targets higher volumes of sales and lower costs through accumulated experience.

Complementary product pricing is seen where one dealer says that most profits are not realized from new cars but after sale services like spare parts. Finally, no dealer talks of incurring losses meaning that they have employed the break even pricing (Langfitt 2).

Product Marketing Versus Service Marketing

There is a major difference between marketing of product when compared with marketing of services. Many business men market their tangible products very easily but find it very tricky to market services. Several features significantly differentiate these two kinds of products some of which are discussed below.

Marketing of a service involves marketing of relationship and value as compared to the visible tangible product. Relationship and value needs consumer conviction rather that a tangible product that he/she can confirm of the same. The physical presence of a commodity has more appeal to the consumer rather than something that can only be confirmed after it has taken place.

For example, it is possible to look at the value of a packet of maize flour by looking at the ingredients whereas its not possible to know the value of counselors services. Whereas the reputation of a tangible product can be determined by the various products on display, the reputation of a service is time based and depends on how a particular individual can deliver that service.

For instance, it is not easy to determine the reputation of a lawyer unless you confirm the way he will defend you whereas by walking through a showroom, it is easy to outline the reputation of various car models. Again, it is easier to test the quality of a tangible product, like checking the features of a computer that you may be looking for but it is very difficult to test the quality of a service before receiving it.

For instance, you can only confirm the quality of the work of an architect by the products of his structural planning. Also, a consumer can return a tangible product to the seller but a service cannot be returned (DK 6).

Works Cited

Anon. Pricing Strategy. NetMBA Business Knowledge Centre, 2010. Web.

DK. Product Marketing vs. Service Marketing What You Need to Know. Business Knowledge Source, 2010. Web.

Langfitt, Frank. Cash or Credit, Car Deals Abound. NPR, 2009. Web.

Rao, Vithala. Handbook of Pricing Research in Marketing. Massachusetts: Edward Elgar Publishing, 2009.

What are your thoughts on the success or failure of these two initiatives?

Tata Corporation has recently announced that it will manufacture, and sell later this year a four passenger vehicle that will sell at around $2100. At that price it will be the cheapest car in the world. The Nano is a safe affordable, all weather vehicle aimed at hundred of thousands of families in India who would otherwise have bought motorcycles.

The Indian Ministry of Development on the other hand has announced that, it will develop and distribute an ultra-cheap tablet PC, the Sakshat which will retail at 35 US dollars equivalent to 27 Euros. The computer is aimed at students and low-income groups especially in the rural areas of India.

The two initiatives are likely to succeed because of several reasons. First, is because of the fact that these products are targeted towards a market segment with a huge untapped potential.

The millions of people in the low end of the market have been neglected in the past and no products have been developed for this market segment. These people have been ignored by manufacturers in the past because they were thought to have no buying power.

Secondly, the initiative is likely to succeed because the price cost of owning and using the products is affordable. The Nano costs about $2100 and its fuel consumption is very low at 50mpg.

Likewise the tablet PC costs $37, a price so low that IT experts doubt whether it would be attainable. The PC can be powered using solar power therefore those not connected to the power grid are not affected. These costs are within the reach of many ordinary people who compose the target market.

In addition these products despite their low prices do not compromise on quality. The Nano meets all the safety and environmental requirements which makes its as safe as any other vehicle to drive. The tablet PC on the other hand has advanced features which are found in modern tablet PC such as Android software for browsing the web, it is Wi-Fi enabled, has a seven inch screen, USB ports and 2 GB memory.

In conclusion the products are most likely to succeed as they target a huge unexploited market; the products are affordable and the government minister is determined that the project must succeed whatever it takes, on the other hand the Tata management has put in place mechanisms such as expansion of manufacturing plants in order to ensure that the project succeeds.

Ethical Issues

It is commendable that the two organizations seek to bring useful products to low-income groups and the underprivileged in the society. The Nano affords the poor, a safe, all weather, and comfortable car while the Sakshat computer enables millions to be integrated into the global IT revolution. The two products put aside the strong profit maximization motive and instead aim to help the underprivileged in the society.

Despite being cheap, they do not compromise on quality and standards and the burden of maintaining and operating the product is minimal (50mpg) or zero when solar powered.

The negative imperative is that the cost of producing the tablet PC may require government subsidies which IT experts feel is not what the people in the rural area need because it is designed for university student. This implies possible wastage of government funds.

In the case of the Nano, the car is stripped of certain features such as airbags; these means it is less safe than others. Regardless of the need to economize safety standards should be maintained at all cost even if it requires the price of the vehicle to be increased upward.

Creative Pricing Strategies

In this section we are going to briefly discuss the five major pricing strategies that are evident in our case scenario analysis, these are;

Discounts and rebates: Car dealers are offering discounts and rebates to entice customers to buy. For example a fully loaded Ford Fusion whose price tag is $25,000 goes for $20000 when all is said and done (Langfitt).

Substitute products: Car dealers propose to customers, products that match the customers budget and desire. For example, a customer with budget constraints might opt to buy the lower priced S model of Ford Fusion rather than a more priced model.

Used cars: Car dealers also use the option of selling used cars to their customers to meet the needs of people who may want a car but may not be able to afford a showroom vehicle. Most dealers apparently make higher margins on used cars than new cars because unlike new cars whose prices and margins are fixed, used cars are not.

Trade-ins: This refers to when the value of a used car is used as payment for a new car which is deductable from the overall amount. The buyer would benefit because they dont have to incur costs and time advertising their old car but get a rebate for the value equivalent to their old car.

Selling value products: Car dealers are stocking vehicles that correspond to the prevailing market conditions. When the price of fuel goes up for instance, fuel- efficient cars or cars using alternative fuels are sold at a premium price; one the other hand when the situation changes such cars are sold at a discounted price.

Types of Marketing

Marketing of products is different from marketing of services for various reasons; however the main reason is because products and services are essentially different in nature and form; whereas you can see touch smell and feel a product, services are intangible, invisible and transient (Lovelock and Wirtz).

Another difference is that products can be stored; services cannot be stored and have to be consumed in real time (Lovelock and Wirtz). Finally, products especially durable ones are produced long before they are to be consumed while services are produced when a customer orders for them and consumed immediately usually at the same place.

Some of these examples are when a car is manufactured long before it is delivered to a show room or a service like a visit to the dentist where the dentist treats a patient only when the patient enters into a dentist clinic.

Since services are invisible and intangible, it is difficult for prospective customers to know the quality of services they are buying. When buying a product e.g. furniture a customer can see, feel, smell, touch the product and decide what to buy.

Works Cited

Langfitt, F. Cash or Credit, Car Deals Abound. National Public Radio, 2009.

Lovelock,C. & Wirtz, J. Services Marketing: People, Technology, Strategy 6^th Ed. New Jersey: Prentice-Hall, 2007. Print.

Introduction

The theory of marketing establishes pricing as one of the major contributors of the marketing mix. Pricing attracts potential buyers and inspire them to purchase goods. Fast food companies distribute and advertise their products using the marketing strategy; they also apply the strategy to retain a desirable business relationship with their clients. Pricing is important in marketing mix.

It is however one of the hard decisions experienced by fast food industries because of high competition rates (Myers 1997,p.20), local trading blocks, counter market requirements (Cavusgil & Zou 1994,p.18) and harsh exchange rates (Knetter 1994,p.14).

Fast food customers have different opinions about the products produced by different fast food restaurants depending on their pricing. For that reason, setting product price to satisfy different customers is a hard task. The price of a product may have an effect on consumers feelings about the quality of the product.

Fast food companies have to come up with pricing strategies for their products in order to fit into global markets.

Fast food industries are faced with a hard task of setting prices for global markets. Different countries have different decisions concerning products, their pricing and distribution in global markets and local markets (Jain 1998, p.71).

In addition, other factors like trade penetration, product demand and competition, control over competition entry, market and environmental factors, fast cash recovery, political, social-cultural and economic factors should be considered when making pricing decisions for global markets.

Pricing strategies

Price is the value charged for goods and services in monetary terms. The price of a product takes into account the cost of producing the item, the cost involved in providing the item to the customer and the amount expected in profit to avoid being eliminated from the business.

In order for the fast food companies to stay in international markets, they should try to maintain best quality at lowest price. Price can be direct indication of quality of goods and services. Fast food companies should therefore consider different factors before pricing their products when venturing into global markets.

Reasons for selling globally

Companies opt to sell globally following the pull factors attracting them to foreign markets, and the push factors that make local markets unattractive.

Some of factors that have led fast food companies to go international include: production of goods for international export only, congestion of local market thus goes globally to enjoy large economies of scale, the type of products that call for companies to operate globally and saturation of local markets.

Fast food companies should consider pricing as a measure of readiness to face competition not only from local markets, but also from global markets. Being globally competitive is important for the success of fast food companies exports. It also strengthens the domestic companies to counter foreign imports. Success in exports is important to a nations economy, not only at macroeconomic level, but also at micro economic level.

Fast food companies that are involved in global markets have an additional advantage to those at domestic market levels. These advantages includes: high levels of sales and opportunities, reduced production cost due to large sales volume, high profits due to low production cost , high competitive power increases the companies status at global market levels and taking advantage over large economies of scale.

Fluctuations in prices of fast foods help the fast food companies to set prices both domestically and globally. Discovery of new markets for their products with low local prices assists these companies in setting the prices of these products internationally.

This helps in extending the life cycle of the product in the market. Fast food companies that operate internationally have the advantage of finding untapped markets for their products; therefore, they have a choice of fixing prices for their products.

Pitfalls of international markets

Knowing the pitfalls associated with international markets is a strategy that is applied by fast food companies when setting the prices for their products. Some of these pitfalls include: a lot of time is required by the management in decision making process and neglect of domestic industries as a result of a lot of devotion to international companies by the key staff.

Additional industry facilities maybe required and advertising and sales promotion might be needed to translate into overseas languages.

The products might require more modification to cater for global market requirements and the companies may be required to offer credit facilities to curb competition and domestic custom transactions, which consumes lot of time. Considering these pitfalls is an important strategy that fast food companies should use when setting the prices for their products globally.

Global markets vs. domestic markets

Before making decision about setting prices for their products in global markets, fast food companies have a task of determining the factors that influence the environment in which the international market takes place. They should take precautions like making comparison between the natures of local market with that of international market.

Basically, there are added complications associated with making sales across international borders. These challenges may be associated with environmental, economical, legal and cultural factors of the new global market. The company may be required to follow some regulations, both political and monetary; this may affect the initial stages of global pricing and marketing (Diamantopoulos 1995,p.6).

Fast food companies that operate in international markets face more competition as compared to those operating locally. International markets are comprised of extra markets as well as new environments and parameters.

This means that companies have to take more marketing and administration functions. Therefore, when pricing for global markets, these companies should consider the change in attitudes of the targeted clients. It is imperative to carry out a survey to get accustomed with the consumers culture, religion and language (Douglass & Wind 1987, p.24).

For fast food companies to survive and to be established in international markets, they have to think ahead of their local markets. The duty associated with global markets is similar to that of local markets. In both cases, consumers are the driving powers towards marketing, and therefore, companies need consistency in production.

The pricing should match the market needs and their distribution channels. This can however be different in the domestic markets. Therefore, companies get used to the requirements of these domestic consumers. However, at global levels, economic, social, political and technological factors have been used to examine international market opportunities in pricing products.

Social factors

Different people from different cultures have diversity in tastes of products. When setting the prices for their products, fast food industries should put into consideration the population structure of the international market they are targeting. Most major international markets of western culture are comprised of an aging population. The demographic trends associated with countries like China and India indicate a high rise in global marketing.

Social factors will incorporate the emergence of young people as a new market segment. New global markets, like Africa, are growing and becoming a significant part of international trade. Fast food companies have to consider the local languages, education and religion, values and attitudes, material culture and aesthetics.

Fast food companies have the responsibility of cautiously studying the target group in the market, customers behaviors and their purchasing power.

According to Douglass and Wind (1987, p.27), the level of pricing is a significant criteria applied by customers in determining the competitiveness of a product. In addition, other criteria like the quality of goods and their performance are also vital to customers.

Therefore, when pricing, fast food companies must have information concerning perceptions, tastes, preferences and purchasing power of consumers in regard to the prices of the products (Theodosiou 2000, p.247).

Technological factors

In order to come up with good pricing strategies, fast food companies should examine the technological nature of the global market. Advancement in communication and infrastructure is a significant step in satisfying the needs of customers.

Most international companies depend on already established local infrastructural networks for distribution of goods to their customers. This is cost effective and may have a great impact on price and profits. Technological advancements are dynamic phenomena.

An ideal example is the Internet; it facilitates online transactions between companies suppliers, partners, customers and subsidiaries worldwide. However, it can also create an increase in competition, and therefore, technological advancements create both challenges and opportunities.

Pricing is affected by environmental factors; by considering the fundamentals of cost and self interests of the companies, fast food industries should take advantage when there is a fluctuation in environmental factors (Williamson 1975, p.34). Due to technological improvements, environmental factors such as monetary and competitive forces affect the global performance.

Economic factors

The economic stability of any international market is measured using its Gross Domestic Product (GDP). An increase in GDP means an increase in demand for products and services. Fast food companies should put into consideration the flow and distribution of profits within the country which they want to invest. In this way, they are capable of determining their pricing following the GDP of that country.

It is important for the companies to look not only the current economic development of a country, but also the future development. This can be determined by the overlook of countrys demographic trends, the trends on economic development and inflation, income distribution and age, the state of urban growth as well as activities that will influence markets and pricing.

The nature of the economy of a host nation affects the decisions concerning pricing. It affects the companys costs; influences demand power of a particular product in the market and the will to purchase a product by the consumers (Whitelock & Pimblett, 1997, p.48).

Political factors

According to Theodosiou (2000, p.249), pricing is determined by rules and laws which facilitate modifications of goods, compliance with the hygienic standards, environmental policies, and production procedures that exists in global markets.

Policies set by the government of foreign countries are vital in lawmaking and establishment monetary frameworks. For fast food companies to carry out their businesses in global markets, they should abide by these rules and regulations when setting prices for their products.

Policy environment

For fast food companies to make decisions about pricing their products in foreign markets, they should put into consideration the environmental factors of such markets. These factors are put in place to determine whether such decisions are opportunities or constraints in that market. The social and cultural structure of such a market is the determining factor that is first put into consideration.

By accepting bilateral market agreements and other fiscal and policy interactions, companies should also abide by the countrys marketing standards and rules. Therefore, companies must obey the law; know government policies and the way they are created. This is vital for their decision making concerning the product pricing (Myers & Harvey 2001,p.4)

Conclusion

Pricing can be considered as one of the greatest challenges faced by fast food companies. Making decisions concerning the price in global marketing is a complicated task. It may comprise the cost of production, cost of distributing the goods and the outcome of goods in terms of profits in order to remain in the market. Appropriate pricing considers the costs, competition and demand for the product in the market.

In local markets fast food companies have a freedom to price their products without taking into account the pricing policies of their competitors. This also applies to international markets where the market is dominated by many competitors. Fast food companies are left with no choice but to follow the existing price, or sometimes lower their prices to sell more and win more customers.

Refrences

Cavusgil, T & Zou, S 1994, Marketing Strategy-Performance Relationship: An Investigation of the Empirical Link in Export Market Ventures. Journal of Marketing , vol. 58 no. 1, pp.1-21.

Diamantopoulos, A 1995, Making Pricing Decisions: a Study of Managerial Practice, London, Uk, Chapman and Hall.

Douglass, P & Wind, Y 1987, The Myth of Globalization. Columbia Journal of World Business , vol. 22 no. 1, pp.19-29.

Jain, S 1989, Standardization of International Marketing Strategy: Some Research Hypotheses. Journal of Marketing , vol. 53 no. 1, pp.70-79.

Knetter, M 1994, Is Export Price Adjustment Asymmetric? Evaluating the Market Share and Marketing Bottleneck Hypothesis. Journal of International Money and Finance , vol. 13 no. 1, pp.13-68.

Myers, M 1997, The Pricing of Export Products: Why Arent Managers Satisfied with the Results. Journal of World Business , vol. 32 no. 3, pp. 277-289.

Myers, M & Harvey, M 2001, The Value of Pricing Control in Export Channels: A Governance Perspective. Journal of International Marketing , vol. 9 no. 4, pp.1-29.

Theodosiou, M 2000, Factors Influencing Degree of International Pricing Strategy : An Empirical Investigation. Marketing in a Global Economy Proceeding , vol. 36 no. 3, pp. 246-530.

Whitelock, J & Pimblett, C 1997, The Standardization Debate in International Marketing. Journal of Global Marketing , vol. 10 no. 3, pp.45-66.

Williamson, O 1975, Markets and Hierarchies: Analysis and Anti-trust Implications, New York, The Free Press.

Snapple is an American soft drink company that ensures it has an effective product strategy: the strategy ensures that the company comes up with products that are competitive and responsive to the needs of the customers.

The company makes brands of different flavors depending with the target market; some of the products include juice of different flavors, tea drinks, water, diet drinks, and fresh squeeze among others. The driving force to buying a certain product is the target market that the products are aimed at selling to.

To come up with the products, the company engages in massive products and market research (Snapple Official Website).

The main change that should be made in the companys products is the packaging that they use: most of the products have been packed on plastic material that destroys the environment; with the decomposition rate of plastics, when they have been deposited, they pollute the environment.

The company should look for paper packaging material (when using paper concentration should be on recycled paper material), they will be less polluting.

Snapple can be said to have a strong brand name across the markets it operates in, despite the competition in the soft drinks company, the company has been able to command an increasing market share and in the future its markets are likely to improve even further. When faced with an issue that can challenge the growth of its brand, the company is quick to react and change the ill move.

The company can increase its markets further if it can have some low alcoholic products alongside the main line. The strategy will be a move of brand extension strategy: to get into the market, the company should make use of the strength of the current brand to persuade people adopt and embrace the new products (Monroe 63).

Pricing strategy

The company uses a premium pricing model; the products can be said to be slightly higher than the average price of commodities in the industry. The reason why they have adopted the method is because of the strength of the brand. It has high quality products that can command a higher market than the others; when using the method, the company targets the working class and the high class members of the society.

Premium pricing model is a strategic pricing model where the company rests on it strength in the market as well as the quality it offers. Since 1972, when the country was incorporated, they have developed unique products designs and they can blend sweet flavors to increase the market.

When pricing the products, the company looks into the costs incurred, the profit margin as well as the costs sold by other companies in the same industry. After noting the average price in the market, the companys marketing team then adds a margin that represents the premium as required by premium pricing strategy. The pricing method gives a higher return to the company but makes the products not affordable by the less fortunate in the society.

The company should looks into the pricing approach that it is using; the current approach is locking the less fortunate in the society to afford the products. It should start taking use of economies of scale that it currently enjoys; with the current rate of economies of scale, the company can have some quality flavored products at a lower price (Kotler and Armstrong 263).

Works Cited

Kotler, Philip, and Armstrong Gary. Principles of Marketing. New Jersey: Pearson Prentice Hall, 2010. Print.

Monroe, Kent. The Pricing Strategy Audit. Cambridge: Cambridge Strategy Publications, 2003. Print.

Snapple Official Website. Snapple. 2011. Web.

Companies can use different pricing strategies to attract customers and keep them invested in the business. For some, competitive pricing appears to be the best option because it capitalizes on peoples desire to save money. However, this approach is not always practical, as many consumers are willing to pay more for special treatment, comfort, or additional features. According to Mohammed (2018), many organizations can benefit from implementing a Good-Better-Best pricing model. This strategy offers several product or service tiers, each containing more features than the last. The idea of this model is that most customers are willing to pay more for a product to not trade down for a less appealing version. This strategy can be used for online and mobile-based applications, which often already have some tiers. For instance, such apps as Ten Percent Happier may benefit from changing their approach to a Good-Better-Best model.

Currently, the app Ten Percent Happier operates using a freemium model. It has two tiers  a free version with limited features  and a premium subscription that gives users full access to its library of sounds, guided meditations, challenges, and podcasts (Ten Percent Happier, 2022). While this strategy may be attractive to customers, it lacks variety. This may make many clients hesitant to choose the premium version over the free one. Thus, the inclusion of the Good-Better-Best model has to focus on finding which features of the current premium model can convince not paying users to upgrade. It is vital to note that the free version of the app cannot be removed to keep an option for users who want to download and try out the application without committing to it. It can be viewed as the Good part of the strategy, although it brings revenue only through advertising.

The Better option has to include some features that the customers deem necessary. For many, advertising-free meditations and podcasts and more choices of meditation exercises and sounds can become the basis of this package. Therefore, the Better version of the app should include everything free users can access, such as the main meditation course, the weekly newsletter, and a one free meditation challenge. Next, the company can add a range of other meditations and a small number of challenges that can be opened at specific periods. This tier should also allow customers to listen to all products without ads  a feature many users will likely want.

Finally, the Best version should focus on building a personal connection with the user to increase their feelings of comfort and exclusivity. At the moment, the premium feature includes meditation courses with experts. This service can become a part of the Best tier, and the organization can add regular posts from these experts or an ability to ask them questions to be answered in a premium newsletter or blog post. These options will create a channel between the company and the customer and establish a relationship where users can gain more from a more expensive subscription. Furthermore, the users will be able to choose from all existing meditations and participate in challenges regardless of the time limit.

The Good-Better-Best approach can improve the freemium model used by many companies creating mobile applications. Such apps as Ten Percent Happier have a simple tier spectrum that includes a free and a paid version. This model attracts consumers but keeps many of them reluctant to pay. A new strategy that adds more tiers keeps some of the best features  such as the lack of advertising and more choice options  in the Better option while presenting different experiences at all tiers.

References

Mohammed, R. (2018). The good-better-best approach to pricing. Harvard Business Review, 96(5), 106-115.

Ten Percent Happier. (2022). Membership. Web.

Toyota

One of the worlds leading car producing companies, Toyota has been enjoying a worldwide success not only due to the quality of its products, but also because of the pricing strategy that it has chosen when entering the global market. Though the change of the environment, in which the organization had to evolve, was drastic, the application of a customized pricing strategy leveled the process and quickly turned Toyota into one of the most recognizable and successful brands (Hammond 79).

When it comes to identifying the specific features of Toyotas pricing strategy, one must mention that the organization incorporates two approaches in order to attain a maximum benefit. To be more specific, Toyota combines the low-price approach and the market share strategy in order to attain a maximum efficiency. Indeed, with the adoption of the specified approaches, it becomes possible for the company to display certain flexibility in adjusting its prices (Sallee 192).

The suggested approach could be criticized for its pandering to the target demographics. Indeed, by lowering the prices too much, Toyota may face the threat of losing a significant part of its revenues. With a well balanced approach towards the production and promotion process, however, it will be possible to introduce sustainability into the companys pricing strategy.

As far as the companys P/E ratio is concerned, it should be born in mind that Toyota is currently trading its shares for $ 114.54 per piece (Toyota Motor para. 1). Since the company has been earning approximately $ 11.52 per share over the past 12 months (Toyota Motor para. 1), Toyotas P/E ratio will make 9.9%.

Plexus

Though the approach that the Plexus Worldwide has chosen for its pricing strategy can be viewed as rather weird, it, in fact, allows for embracing a range of opportunities. According to the latest data, the company has managed to incorporate the principles of profit maximization into its current pricing strategy in order to obtain higher net revenue. By boosting its cost margins, the company is clearly maximizing its profits via the value based pricing. Moreover, the organization is evidently aimed at exploring the existing bundling option.

The latter can be viewed as a rather reasonable approach in the realm of tight competition (Lin and Chung 211). Seeing that the organization operates in the environment, where multiple options are welcomed by the customers, the bundling strategy creates premises for the companys economic growth. The strategy in question, however, also has its problems; particularly, the threat of overall sales being lowered due to the excessive use of the bundle strategy can be expected (Aloysius, Deck and Farmer 663).

It should be noted, though, that the Plexus Company has been careful enough not to abuse the bundle strategy. Offering the customers only the necessary attributes of health and wellness supplements, the organization manages to collect impressive revenues. Indeed, as long as the customers feel that the company provides them with supplementary services, and comparatively cheap ones at that, they will return for new and more exciting experiences.

According to the official statistical data, the price per share in the company makes $38.52. The earnings per share, in their turn, have been quite consistent over the past twelve months and make $2.58 (Plexus Corp. para. 2). The current R/E ratio of the company will make 14.93.

Works Cited

Aloysius, John, Cary Deck and Amy Farmer. Price Bundling in Competitive Markets. Journal of Revenue and Pricing Management 11.6 (2012), 661672. Print.

Hammond, Robert G. Sudden Unintended Used-Price Deceleration? The 20092010 Toyota Recalls. Journal of Economics & Management Strategy 22.1 (2013), 78100. Print.

Lin, Hiu-Ling and Yan-Shu Chung. Bundling Strategy and Product Differentiation. Journal of Economics 108.3 (2013), 207229. Print.

Plexus Corp. The wall Street Journal. 2014

Sallee, James. The Surprising Incidence of Tax Credits for the Toyota Prius. American Economic Journal: Economic Policy 3.2 (2011), 189219. Print.

Toyota Motor. Yahoo Finance. 2014.