Running Head: FOOD SERVICES BUSIESS 1
FOOD SERVICES BUSIESS 3
Pricing Strategy Consultation
Professor Yolanda Humphries
MKT402 Strategic Market Pricing
July 29, 2018
The company that I chose earlier is a food services business. The business deals with a wide variety of fast foods as well as soft drinks and groceries. The services are made available to the clients by receiving their orders and therefore custom-making their requests and making them available to them. The company currently faces several challenges, and this has been affecting their operations in the recent past. One of the significant problem that has been affecting them is the pricing issue. This is usually because the company does delivery to their clients and this is definitely and added cost to them. Another significant issue that has been affecting them when it comes to their prices is as a result of poor communication strategies with their clients and hence making it difficult for them to communicate their changes in pricing when compared to their competitors.
Pricing decisions are affected by a number of critical factors. One of these factors is technology. Currently, technology is a major tool used in business. Technology can result to either raising or lowering of pricing. Lowering can be done whenever the technology results in the reduction of production costs. Rising prices is done when the cost of acquiring the technology is high. For my client, the use of technology has led to the reduction in production costs. It has led to increased speed in the delivery of services. Moreover, use of technology in the organizations has resulted in reduction of personnel which save some expenses. Modern equipment is used in packaging, preservation, and processing of food products. Another critical factor is consumer preferences. Goods that tend to be preferred by consumers tend to cost more, however, this may not be effective when other companies offer the product. Furthermore, business regulations have an impact on the pricing decisions. All governments have business laws which regulate price of every product in the market. This is meant to ensure that consumers are not exploited. My client has been making pricing decisions based on the above factors (Nagle et al., 2017).
Value has an impact on the company’s pricing strategy and profitability. Since the firm is highly valued, the company prices its products highly because of its huge market base. Selling products to many customers at higher prices results to higher profitability. Market segmentation refers to dividing a large market into sub groups based on similar preferences. The key importance of market segmentation is that it ensures that each customer is satisfied (Hague, 2018).
Looking at the case presented by our client, I can conclude that actually, they have an effective pricing strategy. Despite the fact that there was poor communication between them and their customers, this has been mended and there is evidence of proper communication between them and hence making sure that their customers are aware of their prices and all other necessary information. The proper use of the technology by the client has also proved to be advantageous and hence resulting in better communication strategies where the company can easily communicate relevant information to their clients (Monroe, 2017). Finally, the information that they possess have also helped them make appropriate decisions regarding communication of prices to their clients making sure that they always make profits in the market.
Monroe, K. B. (2017). Pricing: Making Profitable Decisions. McGraw-Hill Companies.
Nagle, T. T., & Müller, G. (2017). The strategy and tactics of pricing: A guide to growing more profitably. Routledge.
Hague, D. (2018). Pricing in business. Routledge.