Pricing decisions
Setting the Price
- Price setting is one of the major marketing mix methods. Is a vital issue which is based on product positioning. Moreover, the pricing affects the marketing mix elements like channel options, product attributes and promotion (Cant, et al, 2009). The pricing procedures used involve: Creating a marketing strategy, making marketing mix choices, approximation of the demand curve, and computation of cost, understanding of environment aspects, and setting pricing goals and getting the price.
These strategies have varied implications to a company like Wal-Mart. The first one is that the company will be a dominant competitor making them able to make favorable discretion in the strategies used. The competitors are placed at a disadvantage which may arise due to weak brands or quality.
- If the average price were to be placed constant it would be favorable for Wal-Mart Company to employ a slight high cost of a section of the year while varying it for precise occasions of the year. The Wal-Mart Company will charge higher prices when the company produces new products that are not found anywhere. On the other hand, lower prices will be charged on occasions such as loyal customers and company hitting its target revenue goals.
- Price setting is a set of choices that the marketer makes so as know the price direct and indirect clients pay so as to get a product. When setting the price the marketers may consider a number of issues: assessing the company and market goals, determining the initial price, setting the standard price adjustments, determining promotional pricing and stating the choices available (Kotler, & Keller, 2011).
The most difficult of the stages to Wal-Mart Company is the setting of the price with the help of cost pricing as well as its alignment with the company goals. This step does not take into consideration the intended market’s desire for a good. This brings about issues in managing a competitive stage where competing companies always change their prices.
Pricing Methods and Strategies
This step is implemented through markup method which is used by the company as it gets equipment from suppliers and uses a section increase on the product cost so as to get a price. Wal-Mart being general retailer set a precise percentage on things like women’s clothes, garden tools among others. It uses the “Every Day Low Prices” as a mode of limited prices when there is high volume. Another method that can be used is cost-plus method which is met by increasing a fixed monetary size to the product cost.
Wal-Mart pricing tendency the unit direct cost is multiplied by a predetermined figure so as to set the price. A retailer may acquire a sweater at a whole sale price of $30 and use a markup constant of 1.5 so as to acquire a retail price of $45. It has been marked up by50% so as to acquire a retail cost.
- Wal-Mart’s pricing and company strategy have to be connected to as to achieve the company goals. Wal-Mart’s shift from ‘pricing mission’ has left it vulnerable. If the company uses more on buildings, the costs cannot be low as they are needed to be (James, 2011). The company objectives have to be in line with the strategy as it involves the whole company to meet an effective pricing strategy.
The London 2012 Olympic Games
The London Olympics Games that took place in 2012 there are a number that took place. Getting to know the people behind them and what they did is vital so as to know their duties and how they are connected to the games. The international Olympic Committee is the company that is charged with choosing the city to host the games, set out policies and assets to the games. The development authority manages the infrastructure; transportation, stadia among others. Paul Williamson was in charge of Ticketing for the 2012 games and is part of LOCOG (Gourville, and Bertini, 2011; Townley, Harrington & Couchman, 1998). His challenge was to acquire a preferable pricing strategy for the games and making sure that the games are satisfactory to the attendants.
- There are four major issues that Paul Williamson has to manage so as to help in pricing decision, the first case is the relevance that ticketing has in optimizing the revenue. With the charging of high price, revenue will increase. Another case is the committee is sure that a good number of nations will be watching the ceremony starting and swimming finals though Williamson desires to optimize the attendance of these events as well as in handball and table tennis.
The other instance deals with the sale of tickets to people who are termed to as “Knowledgeable Fans” much has to be considered when handling them to acquire efficiency. Lastly, which is of great concern is to offer tickets not just too high class persons in the society and elites, but also to be at a price that is easy to pay for by a common person. These issues are based in the managing of attendance which is a great concern for Paul Williamson considering that even with the sale of the tickets the seats remain empty. This would be well handle with price discrimination to varied clients.
- It is hard to make this trade off since the ticketing aims to meet its needs as well as cater for the needs of others, in which case backing one side over another would result to failure. This can be either loss for the company or the attendants. The tradeoff would help align the attendance as well as the organizing committee’s needs.
- Pricing is measured using the operating margin as a mode of noting its effectiveness (Baye, et al, 2007). This helps to answer the question if the company is making more money prior to price changes and it served more clients that it initially was.
- There are four big events in the Olympic ought to be charged are varied ranges. With the application of price discrimination, the price of the events ought to vary so as to be suitable for the clients and acquire revenue. The opening ceremony will have a maximum of £2012 and minimum of £20.12. The closing ceremony will cost £1500 maximum and a minimum of £15.00. Athletics will cost maximum of £725 and a minimum of £50, Gymnastics and swimming will be 450 and 50. Table tennis is charged at £210 to £97. This price ranges would enable Paul to meet his target and sell most tickets. By selling the maximum value, the event wont meets the 80% mark while cheaply won’t meet the target cost. Hence pricing discrimination would be of benefit.
The ticket strategy employed focuses on making them available at the most affordable price, it should meet a big portion of the people’s needs and lastly ought to be a good source of revenue to finance the games and the goal is to fill the stadia (Poynter, 2009). The price ranges have been successful in Microsoft that has operating margin of 37% while Wal-Mart has been poor: 15%.
- Yes the Olympic being a onetime event does matter as it would give the organizers time to pick themselves up from bad situations for an improvement. In case it took time more than one time, it would call for added resources to be used which would be quite costly on the part of the organizers.
References
Baye, M., Gatti J, Rupert J., Kattuman P, & Morgan J. (2007). A dashboard for online pricing. California Management Review, 50(1), 202-216.
Cant, et al (2009). Marketing Management. WC: Juta and Company Ltd.
Kotler, P., & Keller, K. (2011).Framework for Marketing Management. Upper Saddle River (N.J.): Prentice Hall, cop.
Gourville, J. and Bertini, M. (2011). The London 2012 Olympics Games. The Harvard Business School. Retrieved from: http://www.wipo.int/export/sites/www/academy/en/courses/executive/pdf/ReadM- Olympic.pdf
James, T. (2011). Pricing Strategy: Setting Price Levels, Managing Price Discounts, & Establishing Price Structures. New Jersey: Cengage Learning.
Poynter, G. (2009). Olympic Cities: 2012 and the Remaking of London. Burlington: Ashgate Publishing, Ltd.
Townley S., Harrington D. & Couchman N. (1998). The legal and practical prevention of ambush marketing in sports. Psychology and Marketing, 15 (4), 333-348.
