Policies and strategies

Policies and Strategies
Student’s Name
Student ID
Professor’s Name
Course Title
Date of Submission
Introduction
Victory consulting business deals with many issues that affect businesses. The company seeks to assist companies so that they can succeed in the businesses. This company offers a variety of consulting services including pricing strategies and policies, forms of businesses, budgeting staffing and many others. Many companies come with business issues that this company where the company offers effective help through professional advice.
A local consumer electronics company that deals with the production of mobile phones and computers is facing a problem in regards to pricing its products. This company has been losing its customers to top competitors since its prices are higher compared to other similar firms in the industry. The firm is a small business that wants to establish itself in the market. The company has come seeking for advice so that it can determine the most competitive price so that it can price its products well for increased sales.
Pricing Policy
This company needs to ensure that its prices are better than those of competitors. The price needs to include all the expenses associated with production, shipping and other costs. There are numerous factors that the company needs to consider before establishing its prices. First, the prices of competitors need to be known so as to ensure that a price is set that is conversant with the market rates.

Customers tastes and preferences of the products need also to be determined to ensure that prices suit these needs. The willingness of customers to pay for the company’s products need to be considered when setting the prices. These factors will assist in setting the appropriate prices. The pricing strategy will need to be effective to ensure that this company increases its profits and also attracts and maintains its customers (Ellickson, 2012). The pricing strategy needs to increase the demand for the company’s products and therefore it must be lower compared to those of competitors. Low pricing strategy will be very effective for this organization as it will be in a position to sell more of its products. The company can also use price discounts as a marketing strategy to help in promoting these products. The company has to sell its products below the competitors’ prices to ensure that price rivalry is avoided. The company will benefit a lot if it sets a price that customers are willing to pay and according to their preferences. The company needs to ensure that it uses competitive pricing strategy to win customers and also to compete well with customers. Discounts can also be used in supporting the low price strategy. As the company continues to grow, it will have established a large customer base, and it will also have a good reputation. This situation will allow the company to increase its prices in the future so as to increase the level of its profits. These tactics can help the company build itself to a more stable company than it is at the moment.
Best price setting process
In order for the company to select the best prices for its products there, is a need to follow the following steps so that to achieve sustainability and profits in its business. The first step is to determine its objectives which include: increasing sales and profits, raising customer base and to ensure that the company’s products survive in the market (Li, 2013).
The another step involves determining the demand for the company’s products. The company will need to consider whether it wants to increase or reduce demand using the pricing strategy. Demand elasticity will also be calculated to determine the effects of increasing or reducing prices.
The next process involves coming up with alternatives base on the factors mentioned to determine the most appropriate pricing. The last step is to determine the pricing strategy that this company will use (Ofek, 2014).
Pricing considerations & strategies that are about product life cycle
Pricing is one of the areas that are crucial and much consideration must be put to ensure that both the seller and the buyers are satisfied. The goal of the client is maximizing the profits obtained from a product. The pricing strategy will ensure that a certain margin is left so as to make sure that the obtain profits. The products being sold are currently in their growth level of the product lifecycle. At this stage, the rates at which the product is high, and there is a need to maintain a margin that will ensure the sellers have also obtained some profits. The sellers will play a crucial role at this stage of the lifecycle. The top three sellers belonging to the client are shopkeepers, retailers, and wholesalers. Maintaining a good relationship with the top three sellers is a consideration that is important to the success of the pricing policy implemented (Li, 2013).
Pricing policy adopted will also take into consideration prevailing economic conditions. In most cases, the perception of the consumers and the buying behavior of the consumers is a factor that should be taken into deliberation so as to come up with well-rounded policy. The price that the other competitors are using should also be a factor to consider to ensure that the policy is balanced.
Challenges of effectively implementing new pricing strategy
There are several challenges that may be encountered during the implementation of the new pricing strategy. Opposition from the staff and most of the people in the management may be one of the challenges that one will have to face during the implementation process of the policy. Some of the reasons for the resistance may be the change in various roles and responsibilities at the workplace that may come as a result of the implementation (Ellickson, 2012).
Another challenge that many be accompanied by revising or updating the prices may cause the difficulties in most of the stakeholder in addressing the variations of the exact value of the product and the expected. Change is expected to be gradual so as to allow most of the parties involved to familiarize with the changes. Implementation of these pricing strategies will require action plans and strategies of implementation to make sure that the execution process of the strategy has been supported by all and accepted by all. Updating the pricing policy will also require the use of piloting approach of implementing changes. The piloting approach will require implementing the policy in a certain set of product for a duration the later applying for the whole firm a process that is expensive and challenging. Piloting will allow the firm observe the reaction of the consumers and the response regarding the new approach.
Differences between incremental and avoidable cost on incremental margin
The client needs first to understand that there are incremental and avoidable costs that will be associated with the updating of the pricing strategy and they are likely to have an effect on the contribution margin. Incremental cost is the revenues and cost that is likely to result from a change like activities conducted. Incremental costs that may affect the contribution margin may be the cost of implementing the pricing policy. Avoidable costs that the client needs to understand is that there is a need to reduce the variable costs and unnecessary expenses (Li, 2013).
Conclusion
In conclusion, pricing strategy is a very important factor that determines the success of business. Additionally, pricing strategy has an effect on the number of the customer a firm will hold and the contribution margin realized. Prices have an influence on the willingness and the interest of the consumer to purchase products. Updating pricing policy needs one to take into consideration the costs of operations, the prices applied to the competitors, and other expenses. Finally, there is need understand the effects of incremental and avoidable costs on the contribution margin.
References
Ellickson, P. B. (2012). Repositioning dynamics and pricing strategy. Journal of Marketing Research, 49(6),750-772.
Li, D. (2013). Examining relationships between the return policy, product quality, and pricing strategy in online direct selling. International Journal of Production Economics, 144(2), 451-460.
Ofek, E. (2014). Match your own price? self-matching as a retailers multichannel pricing strategy. Tech. rep., Working Paper, Harvard Business School.