Rail Price Discrimination Essay

Pricing can play an important role in the success or disaster of any product. Too high a price and the product will fail; too low a price and not enough profits will be made to sustain business operations (Hisrich, Peters, & Shepherd, 2014). The key is to make the customer think that they are paying exactly the right price for the product. Anything else though in this regard means the product is not positioned well in the mind of the consumer. First of all, Gril-Kleen will have to decide on what sort of strategy it needs to pursue. This strategy is decided on three factors namely costs, margins and competition.

Pricing is a pertinent issue in procurement and acquisition in organizations. Consumers buying the commodities of an entity should get clarity on pricing related issues. There is uncertainty in Pro

However, there are several factors for the company to choose its pricing strategy. In this case, it may be better if the company choose to sell its product at $21.50 instead of $15.50. This is due to the fact that price-cutting appears to be not a good strategy in this industry. If every player in the same industry starts to lower the price of their products, every company will end up having the low price, which in turns lead to a low profit margin. Moreover, referring to the calculation in a below table, it also implies that if the price is lower than $12, sales will not be able to cover the variable cost incurred, thus it will bring about a loss in net profit.

Some firms in service industries like repair shops and printing shops prefer to use the time and material pricing to decide the price of products. Under this approach, they need to pay attention to the time and material two parts and determine two pricing rates. The rate is decided by the interaction of demand and supply and by competitive industry environment (Seal, W. and

1. Why does CSX want to buy Conrail? How much should CSX be willing to pay?

As is known, pricing is one of the most important steps for business plan which needs good research, calculations and formulations. There are different pricing strategies to put into effect due to the market and product conditions, such as premium pricing, penetration pricing, economy pricing, price skimming(Voice Marketing, 2012). These four pricing strategies are main pricing policies. They form the bases for the exercise. However there are other important approaches to pricing. These pricing strategies are: Psychological pricing, product line

Price discrimination can be defined as when the same good or service is sold at different prices to different consumers. If we look at this definition of price discrimination, for an example, we can show that price discrimination can be seen in the entrance tickets of parks such as Universal studios; this is due to the fact that there are discounts for children and senior citizens. (Phlips L. , 1983) However, this can be seen as not being discriminative at all due to the fact that if the price difference full reflects the difference in the cost of carrying the good from the seller’s location to the buyers’ location.

The strategy for setting a product’s price often has to be changed when the product is part of a product mix. In this case, the firm looks for a set of prices that maximizes its profits on the total product mix. Pricing is difficult because the various products have related demand and costs and face different degrees of competition.

Keeping these realities in mind, it is very much obvious that for this market, we choose and follow a value based pricing and do not keep the price of the product too high. It is advisable rather to follow an average pricing and let the consumers build some enthusiasm around the product.

This chapter sets out the rationale for price discrimination and discusses the two major forms of price discrimination. It then considers the welfare effects and antitrust implications of price discrimination.

Price interacts with all other elements of the marketing mix to determine the effectiveness of each and of the whole. The objectives that guide pricing strategy should be a subset of the objectives that guide overall marketing strategy. Thus, it is probably wrong to view price as an independent element of marketing strategy or to assert that price, by itself, is a central element in the marketing mix.” (Webster, 1979)

Drury (2012) defines strategies as: “courses of action designed to ensure that the objectives are achieved”. This definition alone encompasses the importance of developing certain strategy in the early stages of production in a company; without strategy there is no clear path of how to achieve targets and most likely failure would follow. In this paper different strategic decisions and processes of pricing will be discussed. The author starts with exploring the economic model of pricing with evaluating its strengths and weaknesses. Further on, author looks at pricing from management accounting perspective and illustrates different models of pricing encompassed by Drury.

A spectacular product that a company might be selling can go bad if the product pricing is not done with proper evaluation. With too high a price, the customers will run away and too low a price, the profits will not be substantial. Price setting is a complex task that requires consideration of costs to the budgeting of key demographics.

Price, which is one of the most important elements of the marketing mix, can be difficult to get right. Pricing too high, or low, can negatively impact on customer satisfaction and revenue. Adopting a pricing strategy is necessary to achieve desired sales objectives (Chan & Wong 2005).

Firm contemplating to enter into a new foreign market and/or expanding its existing operations, pricing of its products and services plays a key role in its success or failure. Businesses engaged in international operations need to adhere to effective pricing strategies, as it is one of the critical factors in determining the competitive position of the companies in the foreign market. Therefore, it is not a surprise that an international marketer, even when it is devised with the right products, the appropriate promotion, and distribution channels, can lose to competitors if a sufficiently large section of the markets is not willing to pay the price the MNC is charging.