The question: Ray works for a major Australian bank. Ray is in charge of IT purc

Question

The question:

Ray works for a major Australian bank. Ray is in charge of IT purchases for the bank and has
to make a large order to replace all the desktop computers in the head office. This question
explores the options for Ray as to how he should structure this purchase in order to get the
computers required by the bank at the lowest possible price. More generally, it is about a
business designing the best procurement process it can to buy inputs into its production
process.

a. Assume that Ray, through his vast industry experience, has perfect knowledge about the
costs (and quality) of a computer supplier. Moreover, assume that the computer supplier
acts like a price taker in the negotiations. What offer should Ray make to the supplier in
order to get the best possible price? Make sure you highlight the intuition for your
suggestion. Practically, if Ray does not have perfect knowledge, but instead has fairly
accurate information about the supplier

Explanation / Answer

Ray works for a major Australian bank. Ray is in charge of IT purchases for the bank and has
to make a large order to replace all the desktop computers in the head office.So,Mr Ray is now negotiating which has a lot to do with Pricing Strategies .So here are some points how to deal with that:
In terms of the marketing mix some would say that price is the least attractive element. Marketing companies should really focus on generating as high a margin as possible. The argument is that the marketer should change product, place or promotion in some way before resorting to price reductions. However price is a versatile element of the mix as we will see.
Penetration Pricing.
The price charged for products and services is set artificially low in order to gain market share. Once this is achieved, the price is increased.
Economy Pricing.
This is a no frills low price. The costs of marketing and promoting a product are kept to a minimum. Supermarkets often have economy brands for soups, spaghetti, etc.
Price Skimming.
Price skimming sees a company charge a higher price because it has a substantial competitive advantage. However, the advantage tends not to be sustainable. The high price attracts new competitors into the market, and the price inevitably falls due to increased supply.
A strategy is a way through a difficulty, an approach to overcoming an obstacle, a response to a challenge. If the challenge is not defined, it is difficult or impossible to assess the quality of the strategy. And, if you cannot assess that, you cannot reject a bad strategy or improve a good one.

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