How Do You Know When The Price Is Right Case Study

How Do You Know When the Price Is Right?

The biggest struggle for managers and companies is to set prices because there are different factors that create conflict between the price and the customers’ perception of the value of the product. The majority of managers believe that they do not have the superior power to set prices in dynamic markets. There are different options that can bring certainty to firms when, by implementing these alternatives firms can improve profitability. One important practice for companies is to focus in the process adapting prices. This helps firms to increase the price effectiveness. Although, this practice is an important step ahead, it should not be the only path creating a successful price-setting system because
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Firms that create a successful environment for pricing have these two elements that are explained in more detailed below.
• Creating a strong and understandable policies helps the company work well in contrast with the marketing strategy, however, it helps the employees understand and apply the ideology of the firm. Yet, it creates ways to simplify the process or effort pricing the products or services. Also, if the policies are applied well, it creates a strong sense of value for the company’s products or services.
• The coordination of the company’s resources and inputs from different departments is crucial for maintaining the ideology of the company, however, it helps the employees in the company to coordinated when deciding the correct pricing. Also, if employees have different targets and problems arise the company can follow a well build process for price-setting. By not having a good communication system, the company can have conflicts between departments which can decrease the efficiency and consequently the profits of the company. To organize effectively managers need to clarify the objectives in the pricing process to all the people that is involve, and determine if the incentives are
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Managers need to understand the the different necessities that the customers have and how the company can take advantage by personalizing the product and creating a more desirable value for different customer segments. A great economic tool to obtain the maximization of profits is price-discrimination that can help company achieve its goal by dividing segments and charging different prices. To be able to perform this technique managers should ask themselves about the different perspectives customers have, and how much the customers will value this differences. After and intensive analysis of the different markets, managers will need to make the final decision according to the results, personalizing the products can be a profitable source for the company, and sometimes the company d not need to change any feature of the product to charge more for

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