You are the head of pricing strategy for your firm and you are very excited abou
ID: 453777 • Letter: Y
Question
You are the head of pricing strategy for your firm and you are very excited about a new point-of-sale system that has just been installed in all your firm’s retail outlets. The system is a state-of-the-art, real-time information system that captures the details of every sale made in your retail outlets. Now, you will have up-to-the-minute data on sales volume trends and performances for your entire product line. You plan to use this data to set prices based on these volume trends. Which of the following basis for pricing are you intending to use?
Markup pricing
Competition-based pricing
Demand-based pricing
Cost-based pricing
Cost-plus pricing
Markup pricing
Competition-based pricing
Demand-based pricing
Cost-based pricing
Cost-plus pricing
Explanation / Answer
It should be competition based pricing.
Competitive pricing involves setting the price of a product or service based on competitors. It is used by businesses selling similar products. The company sets a price for its good based on what competitors are selling a similar product for.
Since real time data would be available, the company can reap benefits of increased sales and revenue by charging price as per market demand.
In cases, where product is not moving or has slow demand, the company can use the real time data and lower the price to cover marginal costs and probably increase the sales.
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