Management Dynamics Essay Example
Management Dynamics — Customers Pricing Things Differently.
In many markets all over the world, different products or goods are valued differently according to either the customers present or the location. In the same manner, different customers value different goods and products differently too according to the ease with which they get to access the product or service among other factors. This factors are analyzed that may lead to the different valuations by various customers.
Different companies employ different pricing strategies that may be used so that different customers will be buying different products at different products and not complain about it or even know. Premium pricing is the strategy of offering special features and benefits to a subset of customers who will be willing to pay more for the benefits and features so incorporated. Here, the customers will be consuming the same products only with the difference of added benefits but at different costs. Price bundling too could be used as a pricing strategy. This is where several products are sold in a bundle at a cheaper price than they would be sold if they were separate. This technique helps customers’ who enjoy single products view them as cheap and those who enjoy the bundle products to get them at an enjoyable price. Using other price setting strategies which include cost plus pricing, or penetration pricing among many more may also be a way to explain why different people value goods and services differently though in the same market.(CivicIntern, July 2009) By employing product differentiation, customers can also value a product at a higher price more than it really worth. Different customers will perceive the differentiated product as of a different value with the original product as they think it is of higher quality. Price differentiation and customer service differentiation are ways in which this difference occours among different customers. Price differentiation is the strategy that helps adapt the product to the moving environment and the social groups involved. Horizontal differentiation can be used to illustrate that different people perceive the product of a similar product differently as if a product has many brands or versions, each brand could have its own unique price and therefore making people pay differently. Different geographical areas may also have different prices for the products so being ordered by the clients making different people pay differently but to have access to a similar product. (Valentino Piana, 2003). Price discrimination is also used show how different customers buy a similar good at different prices. This could either be first degree price discrimination or personalized where a customer is charged on the willingness to pay. Versioning or second degree price discrimination is where people are given a list to self select the price they want to be charged. Group pricing refers to the practice of charging different prices to different classes or groups of customers for a similar product. This could explain the fact why different customers pay differently. (Pricing Strategies, 2011)
Supply chain management is the management of a network of interconnected businesses that are involved in the ultimate provision of products and services required by end customers. It spans all movement and storage of raw materials, inventory, and work in progress from the plant to the consumers. It is aimed at improving the long term performance of the individual company and of the chain as a whole. It requires linkages of the chain so as to be effective , create customer satisfaction and thus deliver to the customers.(Wikipedia,2011). The implications of the supply chain strategies are mainly in the reduction of costs, more competitive jobs and bringing people with the right skills together so as to deliver. Supply chain strategies have helped the chain develop in more places all over the world and thas increased the flexibility of firms and thus leading to the diversification of the risks of the firm. Supply chain strategies are effective if there are specialized techniques and routines to perform specific activities, technological advancement is of essence and the culture of the people is also vital from the skills they have to their tradition. Companies that practice supply chain management report significant costs and cycle time reductions. This is because information systems, processes, ideas and all efforts are integrated together across the whole supply chain. The whole attention is supply chain strategies is to the managers who are left with their managerial duty of coordination to make sure everything is in perfect order. Any improvement or disruption in the chain affects the entire chain.(Enclyclopidia,2nd ed.)
The overall implications for developing successful operations and supply chain are that there is increased efficiency in the long run profits and management of the company and therefore all companies in chains should aim at improving the chain operations.
CivicIntern,10/7/2009, What Are Some Good Pricing Strategies , retrieved on 19/9/11.
Price differentiation, General Marketing Of Articles, web page, retrieved on 19/9/2011.
Valentino Piana,2003, Price Discrimination, retrieved on 19/9/11. http://www.economicswebinstitute.org/glossary/product.htm
Segment 4:Pricing in Mass Markets, Pricing strategies, web page 2011 retrieved on 19/9/11.
Encyclopedia 2nd ed., Supply chain Management, web page retrieved on 19/9/11.
More Important Things