ANSWER TO QUESTION # 1
Upon analyzing the data given in the question, it is depicted that Office World generates highest revenue as compared to other companies. Moreover, this is the premium customer of the company; therefore, the company should focus on maintaining healthy professional relationships with Office World. In addition, the company should apply uniform pricing system due to high PF of office world.
In addition to this, the company should also implement ABC costing system in the Office World, as well as the company should charge high prices or the prices equal to that of FedEx from Office World as Office World is a premium client of the company and is completely satisfied with the services of the company, therefore, it would not resist such increase in price.
Wilson Plating is also a premium client of the company;however it is not as significant as Office World. Moreover, the top management of Wilson Plating seemed to be uncomfortable due to the increase in price, therefore, the company should charge normal price from the client. In addition to this, the company should focus on excessive marketing and promoting its products to Wilson Plating in order to enhance the overall sales as well as the revenue.
Midway Trophy is also a premium client of the company.Moreover, the company has focused on providing quality customer care services to the client in order to earn its customer loyalty. The company should charge nominal prices, plus handling charges from midway trophy in order to increase overall revenue.
Harmony Music is a performance segment client of the customer.In addition, the company should consider making partnership with client such as that HM has recently expanded its business to Eastern Canada, which would require lot of shipping, hence making partnership with HM would lead to earn economies of scale for the company.
Answer to Question # 2
In order to develop a successful road map to pricing excellence, the management should consider the following factors.
PRIMARY FACTORS
Following are the primary factors, which directly affect the road map to pricing excellence.
Customer Segmentation
In order to develop an optimal pricing strategy, the top management of the company should identify the customers of the company and stratify the customers into different segments in such a way that each stratum in the stratified data represents customers of similar purchasing power, and other characteristics. This would help the top management of the company in identifying the potential customer segment of the company, which could bear higher price.
Moreover, it would also help the company in identifying the most profitable customers segments; this would further assist the company in focusing more towards these customers in order to enhance the overall profitability. On the other hand, it would also assist the top management of the company in identifying the lower segment of the customers for example the customers who would not be able to bear higher prices.
Thus, this would ultimately help the company in developing an optimal pricing strategy accordingly, as the top management of the company would be able to identify the different customer segments with respect to their purchasing power.
Price of the Substitutes:
In order to develop an optimal pricing strategy, the top management of the company should also identify and consider the price of the substitutes good, as if the company is charging higher price than its substitutes, then there is a risk that the customers of the company would be motivated towards the substitutes, hence, it could result in customer loss.
However, if the company is considering charging more price than its substitutes, then it should also consider the quality of the product being offered, because in spite of charging higher prices than its substitutes, the customers could still be attracted due to optimal quality of the products or services being offered.
Hence, considering the prices of the substitutes would also assist the top management of the company in developing an optimum pricing strategy(Miller, 2005).
Cost of the Product or Service:
In order to develop an optimal pricing strategy, the top management of the company should also consider the cost of the products and services being offered by the company. The company should have an effective costing system, which could allow the top management of the company to identify the separate costs of the products or services being offered.Purolator Courier Case Solution
Moreover, the costing system should be effective and efficient enough to determine the separate costs of the products and services efficiently as any inconsistency in the costing system would lead to development of ineffective pricing strategy. In addition to this, the costing system of the company should also determine the appropriate overhead costs of the company as it would also be considered in order to develop optimum pricing strategy.
Hence, considering the separate costs of the products and services being offered would also assist the top management of the company in developing an optimum pricing strategy....................
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