Pricing Strategy Research Paper Example | Topics and Well Written Essays - 1250 words

Pricing Strategy - Research Paper Example For instance, market strategy development, which entails market analysis, segmentation, positioning and targeting. Two, making market mix choices entails brand definition, distribution of the brands and brand promotion tactics. Three, demand carve estimation, which entails understanding how quantity required differs from the price. Four, pricing strategy can be determined by calculating the cost, which entails including the variable and fixed costs related with the goods, (Takano, Ishii & Muraki, 2041). The goods cost of a unit is set at a reduced coat that a company might charge and this indicates the margin profit at increased costs. Five, setting objectives of pricing such as maximization of profit, maximization of revenue or stabilization of prices is another way. These pricing strategy steps are interconnected and serve as starting point in pricing strategy creation. Product pricing should consider the legal and competitive condition that the business operates. In competitive pe rspective, the firm should consider its pricing impacts on the competitor’s decisions of pricing; for instance, setting low prices may threaten the price competition, which may not be in favor of any party, while setting high prices encourage increased competitor numbers who have interests in profit sharing. From a legal perspective, a company has no freedom to price its brands at its chose level, for instance, there are price limitations that restrict high product pricing too, (Taylor, & Prestoungrange, 2009). Similarly, low pricing may be seen as predatory or dumping pricing in international trade cases. Proving different prices of diverse clients may infringe laws against discrimination pricing and collusion with rivals to set prices at a consensual degree is illegal in various nations. What drives pricing strategy? Pricing choices affects the product demand in the market, the competitors pricing strategy, the company profitability and the purchasing decision of the custom er like brand product. Determining products pricing may be difficult but yet very crucial for business. Whereas there is no standard way of pricing strategy determination there are various factors that drive ones decision to pricing strategy, MCB University Press, 2003). For instance, the cost, all the hidden costs of the products such as invoice, insurance and taxes drives the pricing strategy because the cost of production must be lower than the selling cost. Second, profit – for instance, the pricing strategy is driven by the amount of money the firm intents to make from above the production cost. The cost factor is another drive, for instance, to make a profit, a company must charge high prices on the products to offset their production cost and marketing costs of the products. The average unit cost must consider both fixed costs such as rent and variable costs such as raw materials cost that changes with production volume. Thirdly, market demand is another driver because demand is the indicator of how clients will purchase a good or a service at certain cost. While the reduced costs attract more customers, the price effect over a prolonged period depends on elasticity. The buyers’ sensitivity on a certain products increases its price. If a company’s products are in higher demand, the company charges higher prices

Compare and Contrast Paper Essay Example | Topics and Well Written Essays - 1000 words - 1

Compare and Contrast Paper - Essay Example Thus, as the name implies, current asserts can be consumed during the current period or they can be converted into cash within a short period of time. A good example of a current asset is a bar of soap in the shop or a bottle of cooking oil. These can be used within the current period or they can be converted into cash when they are bought by a buyer. 2. Any assets whose use is restricted for purposes other than the current operations must be excluded from current assets (Glautior & Underdown, 2001). Assets are classified as noncurrent assets if they are not expected to be converted into cash or consumed during one year of their operating cycle. The operating life cycle of the noncurrent assets is usually very long and it can exceed a period of ten years. In some instances, the noncurrent assets are intangible and they include investments and special purpose funds. These funds cannot be withdrawn or used within a short period but can only be used after proper plans have been put into place. Long term investments are regarded as noncurrent assets as this money will be meant for long term plans and may not be immediately withdrawn even in case of emergence. Noncurrent assets also include property, plant and equipment used in the firm. This equipment cannot be readily disposed given that it is in everyday use to manufacture goods and products that can be sold to generate cash. This equipment can only be disposed if it has past its expected life span but not for quick cash like current assets. 3. The main difference between current assets and noncurrent assets is that current assets can be in form of cash or other assets which can be easily converted into cash. On the other hand, noncurrent assets include investment and special purpose funds and these cannot be readily used like the current assets. Most current assets are tangible and they can be converted into cash easily. On the other hand, noncurrent assets are big assets which include equipment or machinery as well as other property which cannot be converted into cash over a very short period. In some instances, noncurrent assets are intangible which makes them different from the current assets. Another major notable difference between current assets and noncurrent assets is that their operating cycles are different. The operating cycle of a current asset is relatively shorter and it does not exceed a period of one year while that of a current asset is very long. The operating cycle of a noncurrent asset is more than 10 years long which makes it different from the current asset. For instance, operating cycle of a wine distillery which is a noncurrent asset may extend 10 years while that of a grocery shop may be no more than just a several days. 4. Order of liquidity can be loosely defined as the order upon which the items in the balance shit are listed depending on their liquidity (Chasteen, Flaherty & O’connor, 1998). As the name implies, order is concerned with chronological orga nisation of items in their descending order while liquidity is concerned with establishing the readiness upon which cash can be disposed. Something that is liquid is readily used such as cash which can be taken straight away from the pocket to purchase something. In this order, the current assets will come after cash or other payments as these can be