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Price Strategy determination Based on six Steps TV Cable company Fiction

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Determination of price is crucial for an organization. Determination of correct price not only
contributes to the organization`s profitability but also affects success of product. Price is one
the important factor in five P`s of marketing mix. Although other P`s of marketing are very
important but price is still very important factor that affects market share and profitability
organization. Price is pretty flexible element as it can be altered very quickly as compared to
other P`s of marketing mix. According to Ray(2012 )Price directly influence demand,
profitability, market perception and brand positioning. Following factors should be considered
wile determining price.
(i) Price Objectives and justification:-
Determination of product price should be based on Long term (Strategic objectives)
and short term(Tactical objectives). The organizations long term plan is to develop
itself as leading Cable service Provider Company in USA. Organization also wants to
become top choice among the customers. Doing so will require extensive increase in
customer base that will require investments to expand its network as well. Company
has strategic objective to reach 70% of USA houses(Marcus,2012). While short term
objective is to expand its customer base quickly to gain some profits so that
organization can help expand its network to new areas. Keeping in view of Long
term and short term objectives the price objective for organization is Offer
attractive price to customers in order to increase customer base by 25% with
expected return on investments about 22% after tax . (Ray,2005)Organization has
strategic objectives to become top customer choice and wants to expand its
networking other areas as well. Therefore organization is looking to not only expand
its client base but also increase its profitability. The price objective clearly supports
long term and short term objectives of organization.

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(ii) Costs:-
It is very important to consider cost element while determination of pricing.
Different types of costs can be calculated in order to find single costs per products or
customer. I this case able company have following Costs per customer. Cost has very
high impact on prices as if costs increases it also increases the price otherwise cable
company has to decrease its profit margins. (Marcus,2012) .Operations costs can be
increased due to many factors for example operating costs will decrease with
increase in customer base. Similarly costs will increase due to decrease in customer
base. Maintenance costs and Equipments’ costs may vary each month therefore its
price depends on costs of similar elements in previous months.
Operating Costs per Customer/Household P/Month=
Employees $20
Licensing $6
Maintenance $12
Equipment $8
Misc $7
Total = $52
(iii) Level of Demand:-
it’s not enough to just consider cost of product or services. It is also important for
organization to identify level of demand of service over the specific period of time. Demand
of service can be determined by utilization of some demographics and market data that is
usually available in the libraries and internet. If we see the facts more than half of homes in
USA has 3 or more Tv sets. While 38% of USA households have Cable
connection.(Marcus,2012). This means there is still 30% households are with tv and cable
connection. Level of demands also depends on economic conditions of people. People will
only buy cable connection when they can afford it. In case the demand of service has been

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Determination of price is crucial for an organization. Determination of correct price not onlycontributes to the organization`s profitability but also affects success of product. Price is onethe important factor in five P`s of marketing mix. Although other P`s of marketing are veryimportant but price is still very important factor that affects market share and profitabilityorganization. Price is pretty flexible element as it can be altered very quickly as compared toother P`s of marketing mix. According to Ray(2012 )Price directly influence demand,profitability, market perception and brand positioning. Following factors should be consideredwile determining price.(i)Price Objectives and justification:-Determination of product price should be based on Long term (Strategic objectives)and short term(Tactical objectives). The organizations long term plan is to developitself as leading Cable service Provider Company in USA. Organization also wants tobecome top choice among the customers. Doing so will require extensive increase incustomer base that will require investments to expand its network as well. Companyhas strategic objective to reach 70% of USA houses(Marcus,2012). While short termobjective is to expand its customer base quickly to gain some profits so thatorganization can help expand its network to new areas. Keeping in view of Longterm and short term objectives the price objective for organization is Offerattractive price to customers in order to ...
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