ACC 305 MANAGEMENT ACCOUNTIN1.docx - ACC 305 MANAGEMENT ACCOUNTING GROUP ASSIGNMENT TOPIC PRICING STRATEGY TABLE OF CONTENT 1 Influences On Pricing

ACC 305 MANAGEMENT ACCOUNTIN1.docx - ACC 305 MANAGEMENT...

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ACC 305 MANAGEMENT ACCOUNTING - GROUP ASSIGNMENT TOPIC PRICING STRATEGY
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TABLE OF CONTENT 1. Influences On Pricing Decision .............................................................. 2 1.1 Customers .............................................................................................. 2 1.2 Cost ......................................................................................................... 3 1.3 Competitors ............................................................................................ 3 1.4 Competition law, political and ethical issues ..................................... 3 2. Pricing Strategies ..................................................................................... 2.1 Value-based ............................................................................................ 2.2 Cost-plus ................................................................................................. 2.3 Economic-value 3. What to do when pricing is wrong ......................................................... 3.1 Adding Features/ Values ....................................................................... 3.2 Picking the right time ............................................................................ 3.3 Alternative Method ................................................................................. 4 Conclusion ................................................................................................. 1
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1. Influences On Pricing Decision As suggested from the article, we can see that making the products price is really important and it’s significant to choose the right pricing decision so that we can gain the profit target. To determine the pricing decision we can base on the 4 C’s of Pricing. However, we should firstly decide whether we’re a cheap commodity business or a premium enterprise because “no one wants to be too cheap to be considered a prestige product but too expensive to appeal to those saving every penny” (Heidi 2016). Ray-Ban is a good example of premium enterprise, its price is really high and even customer don’t want Ray-Ban sunglasses to be too cheap because Ray-Ban is famous; people choose it because quality, fashion, model and just even the brand. On the other hand, house wares are a good example of cheap commodity business, customer want to save as much money as good so the price should be low. After this step then we can determine the pricing decision we can base on the 4 C’s of Pricing: 2
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Customers (including market positioning) Cost Competitors Competition law, Political & Ethical issues 1.1.Customers (including market positioning) : Apple is a firm with a high quality reputation and they give customers the new technology, innovation, model and the difference from others so they know really well that customers are waiting for their product and happy to pay a high price to own the phone. Moreover, Apple has set their iPhone is a high-class smart phone so they may set a high price consistent with that image. If they overemphasize on price cutting can damage their product’s image and reduce profitability. 1.2.Cost In the long term, firms must produce at a cost below selling price. Apple has chosen China as the main factory to produce iPhone because they can reduce employment cost. “ Manufacturing an iPhone in the United States would cost about $65 more than manufacturing it in China, where it costs an estimated $8” (Businessinsider 2012). 1.3.Competitors Apple and Samsung are in war where they are both competing in Smart phone and Apple has chosen the premium pricing strategy and product differentiation. Apple attempts to increase market demand for its products through differentiation, which entails making its products unique and attractive to consumers. The company’s products have always been designed to be ahead of the curve compared to its peers.
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