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Unformatted text preview: Pricing Strategy Recommendations Big Drive Autos best pricing strategy is collusion and profit maximization. Because BDA is selling the same automobiles as other dealerships, the organization can assume that a price cut or increase will be matched by competitors. In an imperfectly competitive industry a change in one brands price typically engenders a price reaction by the other brands. Therefore, BDA can establish output where marginal revenue equals marginal cost and charge the corresponding price (McConnell et al., 2009). However, BDA is taking a risk because other dealerships could choose to cut their prices. If this occurs, BDAs demand curve will shift to the left as customers will take their business to rival dealerships (McConnell et al., 2009). Recommendations for non-price barrier to entry Recommendations for non-price barrier to entry is implementing services that are a nominal or no cost and customer focused based. These services would include a free vacuum or window no cost and customer focused based....
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- Spring '08