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Case Analysis : Pricing Management Essay

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Pricing Management Manufacturers create multiple product lines to sell to multiple price sensitive groups (Simchi-Levi, Kaminsky & Simchi-Levi, 2008, p. 397). Toyota and all other automotive manufacturers use product versioning to separate and capture both the high-end and low-end customers. Toyota uses product versioning in multiple ways; it is used by creating different styles of vehicles as well as different classes of those vehicles. Toyota creates multiple sizes of sedans, SUV’s and Trucks. Within sedans there is the Prius, Corolla, Camry and Avalon. In the SUV category, they produce the Rav4, Highlander, 4Runner, and Sequoia. The Tacoma and Tundra are produced within their truck category. These different vehicles come in different packages that provide different options that segment customers into their buying desires, based on price conscience or those wanting higher end finishing’s. As an example, if two customers both purchase a Camry from the same dealership, one customer may want an entry level package with just enough options to have a vehicle to drive. The other customer may want every option available on the Camry. Both customers purchased a Toyota Camry, yet the actual vehicles they received have major differences and very different prices. By having multiple options of the same vehicle, Toyota is able to capture multiple groups of customers. Toyota uses discounts to increase demand for vehicles at the end of the model year to sell off remaining inventory

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