Pricing Strategies, Flow Charting and Contract Disputes, Essay Example

Pricing Strategies

The pricing strategies of an organization depend on the company objectives and the goals the company is trying to reach. Additionally, pricing strategies should be based on supply and demand. An organization should not price a product or service too high or too low, because this could result in a loss of sales, which decreases the profits. Different pricing strategies include penetration, skimming, bundling, and competitive pricing.

With penetration pricing, a low price is set to increase sales which, in turn, increases market share. After the desirable market share is obtained, the strategy is to increase the prices. An example in the marketplace that uses penetration pricing is the cable company that offers low initial prices to get the customers, but then hikes the prices up once they have the customers. With skimming pricing, the prices are set high at first and attracts the upper income segment of the population. Then the prices are slowly lowered so that the product attracts the mainstream population. This strategy allows an organisation to skim profits off of each layer of the market. An example in the marketplace that uses skimming pricing is the gaming industry that might price game consoles at an initially high price, but reducing the price over a long term. Bundle pricing allows an organization to group together products or services at a reduced price to encourage sales, such as buy one get one free, which is popular in shoe stores. Competitive pricing involves setting prices to be compared to the competition in the market. This strategy means prices can be set lower, higher or the same as competitors.

Flow Charting

The information gained from flowcharting a process is understanding activities within an organization to guide activity performance. Flowcharting can also help an organization analyse current and future performance processes, such as what to do next or a model for the behaviour process within an organization. Flowcharting helps an organization gain information on making analysis and designing processes and managing those processes in an organized manner. Flowcharts are used as an excellent way to solve problems. They allow an organization to see the big picture of its processes, to manage them every step of the way.

Buyer – Seller

There are different strengths and weaknesses that both buyers and sellers can bring to the negotiating table. For example, a seller’s strength includes having a unique product, which leaves the buyer will little to no other options. A weakness of the seller could be the opposite of this. If the seller’s product is run-of-the-mill, then the buyer has the power to choose a competitor’s product and may do so, depending on any special incentives on the part of the seller. On the other hand, the buyer may hold the upper hand against the seller in a negotiation situation because the seller may not have any more prospects for his product or service. This is a strength. A weakness of the buyer includes being under a time limit. If the buyer’s purchasing decision is time-sensitive, then the seller would have the negotiating strength.

Settling Contract Disputes

Firms often try to attempt to avoid litigation in settling contract disputes because it costs much less to settle out of court than having to pay all the court costs, and then possibly losing the case and having to pay large lawsuit settlements. This is why arbitration venues are available. It is good business for them when companies or people want to settle disputes outside the courtroom.