Pricing Strategy Essay Example | Topics and Well Written Essays - 2250 words

Pricing outline - Essay ExampleAs frugal cycles decline, however, management teams force outnot drive volume improvements. Pricing improvements, however, are an all important(predicate) route to increasing profitability. The key to improving profitability through pricing lies in moving from a tactical to a strategic approach to pricing. Pricing strategy involves much more than merely place price points. In order to achieve profitable pricing, managers must consider both their price construction and their pricing process. Pricing structure is built around orient customer segments and culminates in constructing the Product-Service-Price menu. The menu so fetchs the basis for constructing and positioning renderings for the customer targets. Pricing processes focus on communicating value deli genuinely to the target customers while minimizing negotiation driven price discounting in the selling process.1We begin with the most fundamental of economic constructs, price, because m uch of the analytic power of economic theory stems from the abstract image of markets that generate prices.On the surface, price readjustment might seem like an odd place to understand a process of social construction. few economic precepts are more teachn for granted than the notion that markets determine prices. Moreover, few economic concepts offer so little social content as price. Neoclassical price theory is a super stylized theory of market behavior. It presumes that social content is unimportant to market outcomes. It offers no theory of how prices transaction in a firm simply a notion that they do work. In neoclassical economic theory, firms readily react tochanges in market conditions by adjusting prices. A wide variety of changes may take placechanges in costs, supply, or demand, competitive entry or actions, change in technology, and soon. Firms moderate those changes and adjust prices upward or downward. Classical economicsassumes that because organizations are end owed with this ability to adjust prices, industries,markets and economies can function efficiently. Much of the existing literature in economicstakes this ability for granted, assuming this as a kind of innate organizational capability.To a student of organizations, this seems like an unrealistic belief, and indeed, someeconomists ac distinguishledge this. In economics the literature on the costs of price adjustment arguesthat price adjustment can be a complex and costly organizational problem. For example, Caplinand Leahy (1991) argue that price adjustment is a very difficult, costly and time-consumingprocess, Levy, et al. (1997) suggest that changing prices is a complex process, requiringdozens of steps and a non-trivial arrive of resources, and Ball and Mankiw (1994, p.142)suspect that the most important costs of price adjustment are the time and precaution required ofmanagers to gather the relevant information and to make and implement decisions. Accordingto Blinder, et al. (1 998, p. 21) these costs have become one of the main strands of NewKeynesian theorizing. Yet it remains a problem about which, Blinder, et al. (1998 4) argue,economists know next to nothing, even though a small mountain of