BECK TAXI Harvard Case Solution & Analysis

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BECK TAXI-Pricing Strategy Analysis

Introduction

Beck taxi is a family owned business that was established in May 1967 by Jim Beck.After the death of Jim Beckin August 1985,the business was run by Souter, founder’s daughter. The company is providing dispatch services so that customers get the cab in real-time.

Beck had four categories of account holders that consist of corporate, government, insurance and personal. The company also has four customer service advisors.
Currently the company is facing a pricing challenge, as summer season is about to begin and will last for 3 months. Summer season has negative effects on the taxi business because educational institutions are close and most people go forvacations and other use other transport that is cycle or buses. Souter is planning to increase the radio fee that will be restored for fall season.

Souter has many alternatives option that she is considering. She needs a thorough evaluation on each option so that this will affect the company’s business as well as taxi drivers, vehicle owners and other stakeholders.

Problem statement

The company has been facing a pricing challenge as summer is coming and it has been a past trend that in the summer season, the taxi's demand reduces as people’s usageof the service decreases because of the summer holidays and many prefer to walk or use cycle in these sunny days. The company is trying to address the risk of losing its customers and market share and risk of having significant reduced profits for this season.

The company is specifically concerned with the three months period of summer and will restore the prices in fall season. Currently, the company’s owner, Souter, is considering two options that areas follows:

• Increase the fee charged for radio services out rightly.
• Revise the fee structure as two-part fee structure, a fixed fee in advance and then additional fee on based on number of dispatches.

Analysis
For the pricing strategy, the situation needs to be analyzed thoroughly since this will affect not only the whole cab industry of Toronto, as the company is the largest and leading brokerage company of cab industry, but al soon competitors, taxi drivers, license plate holders etc.

The company should evaluate the factors such as:
• Economic trend: this will affect the pricing decision in and adverse or favorable manner. Factors such as labor cost inflation rate and government fiscal policy should be considered.
• Market demand: the fee should be as per market condition and position of demand and supply.
• Level of competition:the prices or feesarecharged by the competitors and their impact and status in the market. Moreover, their strengths and weaknesses.
• Image and reputation of the firm:the goodwill of the company and its image in the market also affects its price or fee strategy.The customer will be willing to use the services even after the price increase because of their confidence in the company.
Overall, the change in the fee should be cost oriented as well as competition and demand oriented......................

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