When managers have the task of pricing products and/or services, many factors are taken into account. One of these factors include legal requirements that companies have to follow set by the United States and international laws. These laws are set to protect consumers from predatory pricing and discriminatory pricing (Horngren 2011). Predatory pricing is a situation where a company prices its products below its cost of production in order to eliminate competition to the point where the competition has to leave the market due to major losses. Once the competition has been eliminated then the company increases its prices and customers are often forced to buy products at such high prices because competition has been knocked off the scene (Horngren 2011) (Garg, 2011).
It also helps Tesco to identify they gaps in the company and market world. If Tesco is not promoting their products nobody will know their new products exist, that is the reason why is important to promote they products, if Tesco should not promote they products there customers will go to Tesco competitors like Sainsbury. Price: The prices are a very important part of their business but unless their business sells these products with reasonable prices and they don’t advertise and promote this then their customers will never know about this, so their customer could go to other business who are cheaper than them. Their prices very important in a businesses because if there prices are not reasonable than business will not be able to sell their products. If people see the adverts on TV, people want to know how much these products cost and if the product is good and cheap than it can attract customers to the business and to the products.
Budgeting is an essential plan that helps a business understand the probable expenditure and income over a specific period. It is a tool to help the business to provide better financial control for expenditure and also to give the business a clearer direction to achieves the goal. Before setting a budget, it usually brings information together and then interprets of the business and follows by strategic plan. The business will base on the economy needs and individual business capability to come out with statistics and plan ahead on projected the amount of money to use at a certain period and the how much profit will estimate earn. It needs to forecast in a realistic figures and attainable goal.
Components of Supply Chain Management (SCM) The main elements of a supply chain include purchasing, operations, distribution, and integration. The supply chain begins with purchasing. Purchasing managers or buyers are typically responsible for determining which products their company will sell, sourcing product suppliers and vendors, and procuring products from vendors at prices and terms that meets profitability goals. Supply chain
When describing your competitive advantage, look for questions such as the ones below: How will your products and services meet the needs of your target customers? What is special or different about your products and services? Who are your target customers? What are the needs and wants of your target customers? What value added features will you use to gain leverage over your competitors?
This alternative requires consideration of the opportunity cost of eliminating in-house production of the finished coating. While Guillermo may be engaging in self-interested behavior, the owner must consider that each financial transaction has at least two sides. Sellers will also be acting in their own financial interest. Therefore, decisions regarding making or buying certain products hinges on a detailed financial cost analysis. Guillermo’s analysis also highlighted competitors’ actions regarding industry changes.
Explain the Law of Supply, the movements in supply, and assess why Businesses must utilize the elasticity of supply. Supply refers to the quantity of a good which producers are willing and able to offer for sale at a particular price. Individual supply discusses the quantity of a particular good offered for sale by a single seller, while market supply states the quantity of a particular good offered for sale by all sellers of a particular product. It is essential for businesses to utilize the elasticity of supply as it demonstrates how to increase output without a rise in cost or a time delay, whilst also highlighting the situations where it is difficult to change production in a given time period in response to a change in price of a particular product. The law of supply reflect the upward slopping movements along the supply curve due to a change in the price of the good.
It lets us analyse and predict, what impact a change in a variable could have on the demand. Therefore it is essential to companies, to govern their price policy and to plan for the future. In a previous section we already talked about Demand, so the Price Elasticity of Demand determines how much the quantity of a good demanded responds to a change in the price of that good. This is calculated as the percentage change in quantity demanded, divided by the percentage change in price. [Mankiw& Taylor 2011, p 95] Therefore Elasticity reflects the many factors such as social, economic and psychological forces, that influence consumer tastes.
Identify the driving forces (or trends) affecting the non-alcoholic beverage industry and the industry’s key success factors. Competitiveness is one of the key driving forces for the industry. There are essentially two big players Coca-Cola and Frucor keeping prices low and the expectations high. These economies of scale make it difficult for new comers into the industry as they do not have the financial backing, marketing and customer loyalty like Coca-Cola and Frucor does. Well informed buyers with a great deal of bargaining power is affecting the non-alcoholic beverage industry by their ability to drive down prices by making competitors fight for the best price or service so the buyer will choose their product.
Coca-Cola’s proposition of a new-concept vending machine raised concerns and doubts in many aspects from the consumers. However, even early on than the company actually launched the new project, Coke was unprecedentedly confronted by tons of negative reports, some might be supportive, that shared similar concerns toward Coke’s new vending machine. First, manipulating the unit price in a real-time manner is widely considered an act of price discrimination that the can coke would be sell to customers at different rates based on the current temperature. By this logic, customers were divided into two categories: those who bought at hot days, and those who bought at cooler time periods. It seemed legitimate for Coke to pursue higher profit by offsetting the present pricing strategy, yet this might lead those loyal customers who were in need to generate distrust or even resent the company’s unfriendly touch carried by those “mean machines.” As a result, it would be an alert for Coke that wishes to maintain repeated sales through new vending machines, which could even worsen sales contributed from those conventional ones that offer fixed prices.