Universal Car Rental Simulation Harvard Case Solution & Analysis

Universal Car Rental Simulation Case Solution


The case revolves around the (Cars Pricing Simulation Process) for the “Universal Company. The organization is known for its luxury car services, which are based and process its working in Florida(John T. Gourville, 2011). Using the organization pricing simulation process ultimately helps to apply and analyze the real-life implications under different theoretical concepts, which include (Strategy formulation, Pricing Strategy, Competitive Strategy, Economics concepts, and Marketing concepts.

Summary Results for Best Outcome

  • Cumulative Profit : ($-320M)
  • Final Market Share: (65%)
  • Final Cumulative Unit Sales: (9.4M)
  • Final Capacity Utilization: (23%)

Overall Strategic Consideration

Premium Pricing Strategy

This pricing simulation process used a premium pricing strategy to get the results. This strategy considers a repetition of setting high prices to create a new impression of a product in a market and present that the product contains incomparable quality(Subrahmanyam, 2022). However, in a few situations, the quality of the product does not consider improving but the trader starts investing more in the market to create a high-quality impression of the product. A premium pricing strategy presents more effectiveness in the customer's mind and presents the product as a luxury product by offering high quality and new designs. A few of the barriers present at the time of entry include weighty marketing coststhat help to gain customer attention, on-site service operations that help to support the product, create a reputation about the product sustainability, and harsh replacement assurance policies. Traders have the power to create a limit for products soldit helps them to gain exclusive rights to their products and there is no replacement for it. This policy and factor help the organization to take legal action against those trying to copy the original product. This is the reason all of the products are protected by patents and it helps the organization to protect their rights.

Advantages of Premium Prices

There are two main advantages and benefits that are present under the premium pricing strategy for the organization. First is strict barriers for entry it helps the organization to stay alone from the competitors and be able to invest more in their products to make it a high-end brand. It creates difficulty for the competitors to present their productsatthe same price without investing highly in marketing. The second benefit that organizations enjoy by using this strategy is high profitability because premium prices ultimately increase the overall gross margin and it helps the organization to generate more funds for the high-level marketing cost investment.

Disadvantages of Premium Prices

On the other hand witha premium pricing strategy,there are a few disadvantages and downsidesof this method, which firstly include the cost of the brand because the cost of setting up and sustaining a progressive pricing approach is vast and must be continued till the strategy is executed. Then, customer insight into premium brands will fail and organizations will fight to maintain their prices.

The second drawback of this strategy is most of the competitors in the market try to challenge high prices with cheaper products and it ultimately createsa problem by increasing customer awareness and moving the product category to the decline. The third disadvantage is created limit in the overall sales efforts in its first market and after this situation, it is problematic for the organization to expect new growth in revenues. Lastly, the unit price of a product becomes high and it makesthe organization create a limit on low-volume sales and it affects the cost-saving process in mass production.

Premium Pricing Survey

This strategy and method are considered to be tough to generate and continue, only those organizations having widespread product formation, demonstration, and support experience can provide a high excellence experience(Subrahmanyam, 2022). Most organization loses most of their funds because of moving toward a higher price level to start a new business. Fruitful premium pricing organizationsmustidentify that directing on a regular premium strategy is the only method to constantly charge the maximum price for their products.

Pricing Strategy Main Purpose

Variouswillingcustomers will pay a high premium for the quality accessible by universal car rentals, so premium pricing strategies have been used to continue a competitive benefit and increase profits. To maximize growing sales, preserved high prices on weekdays during the simulation period and altered prices on weekends as demand transformed. The purposeofconsuming the bonus is to rise 100% gratification with profits and demand at this price. There is an unplanned relationship between price and demand, and because of the low price, the demand is high and the capacity is low, so the organizationcould not deliver the service.

The cumulative unit price of an Orlando vehicle will decrease the demand for the whole market and advance profits and accessibility. The enormous fleet of Orlando fleet was stimulated to Florida in response to unsatisfied orders. However, it should be noted that the growth of the Florida fleet has reduced utilization and reduced profits. As a result, Florida prices badge again, reaching $40 on weekdays and $50 on weekends. The additionalpurpose to approve a premium pricing strategy is to escape price competition among(GM and its competitors), produceunbeatable price differences, distinguish its business and leisure customers under its brand name, and provide excellent service. The reason for providing quality service to our competitors is that their high prices give us a competitive advantage over our competitors.

Pricing strategies purpose to maximize keep earnings of General Motors leasing companies, avoid price competition, maximize utilization, and increase final market share. Drive the pricing strategy of General Motors Leasing Company to increase its final market share compared to the competitors of General Motors Leasing Company and maximize the company's utilization. , it ultimately maximizes profits........................

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