Standard Machine Essays

614 Words Jun 21st, 2014 3 Pages
Scott, the salesman for Standard Machine, has just received a call from Joann, the purchasing agent for Occidental Aerospace. Occidental has been one of Standard’s largest and most loyal accounts. Following Standard’s fixed price policy, Scott submitted his bid at list price, $429K. Now Joann has called to inform Scott that his bid was not good enough. She told him that one other competitor had bid “under $390K” and another “a little over $400K”. She tells Scott that to win this business; he needs to cut his price by an additional $22K. Although this bid is only for one piece of equipment, Joann reminds Scott that the company will be building two new plants over the next four years, representing “a lot of potential business.” Scott has …show more content…
Standard also can look into a marketing campaign to its customers that can justify pricing that is above their competitors, this could focus on the quality of the product and the services provided that other companies cannot match. Looking at the products required by Occidental could also provide a area for improvement, a little customer research could tell Standard what items Occidental normally orders and then could look at package deals at reduced prices that still have acceptable profit margins. another way to address this issue would be through rebates. Standard could offer customized rebate packages to its loyal customers. This could be seen as lowering their prices for Occidental, Standard needs to ensure that they are not sending bad signal to the market. Straight up price decrease have the potential to start a pricing war, in which case their competitors would have to respond which will depress Standards prices. the offer of rebates or discounts gives customers an incentive to purchase, because the company knows that they will be rewarded.

Another way for Standard to remedy this pricing situation is to offer additional services in order to stand out from their competitors. Warrantee's that exceed their competitors, additional on site

Related Documents