Universal Rental Car Pricing Simulation Report Case Analysis
Introduction
In this case we are supposed to make a report on the Cars pricing simulation process for Universal Company. The company is the provider of luxury cares which is based in Florida. With the help of the company pricing simulation process, we would able to apply and analyze the real life implications of theoretical concepts such as Strategy formulation, pricing strategy, Competitive strategy, Economics and Marketing concepts etc. (John T. Gourville, 2011)
Summary Results of the Simulation for Your Best Outcome:
- Cumulative Profit : $92.3M
- Final Market Share: 51.1%
- Final Cumulative Unit Sales: 10.1M
- Final Capacity Utilization: 77%
Overall strategic consideration
Premium Pricing Strategy:
This pricing simulation used a premium pricing strategy to get results. Premium pricing is the practice of setting higher prices to give the impression that a product must be of exceptional quality. Sometimes, the quality of the product may not improve, but the seller has invested heavily in marketing to give an impression of quality. This strategy is most effective when Consumers consider a product to be a "luxury" product, or a product of very high quality or product design. There are quite a few barriers to entry. These barriers include significant marketing costs that attract consumer attention, various on-site service operations to support the product, a reputation for product sustainability, prepaid, and / or strict replacement warranty policies. May occur. Sellers can limit the number of products they sell so that their products have exclusive rights. There is no replacement. The company can create this situation by proactively taking legal action against anyone trying to copy your product. The product is protected by patents and the company actively protects the rights granted by the patents.
Benefits of Premium Prices:
The advantages of using the premium pricing method are:
- Barriers to entry. When a company invests heavily in a high-end brand, it becomes difficult for its competitors to offer a competitive product at the same price without a large marketing investment.
- High profitability. Premiums can cause an unusually high gross margin. Companies adopting this strategy need to raise enough funds to offset the huge marketing costs involved.
The Downside to the Premium Price:
The disadvantages of using the premium pricing method are described below.
- The cost of the brand. The cost of setting up and maintaining an advanced pricing strategy is enormous and must be maintained until the strategy is implemented. Otherwise, consumer perception of premium brands will fail and companies will struggle to maintain their prices
- More and more competitors are challenging higher prices with cheaper products. This can cause problems, as it raises consumer awareness that the value of the entire product category is lower than before
- Sales volume. If a company adopts an advanced pricing strategy, it should limit its sales efforts to the first market. This usually limits sales. Therefore, it is difficult for a company to expect positive growth in revenue and fees at the same time. As long as the company develops in a new geographic area, we are always looking for the highest level in this market, so we can follow this strategy
- The unit price is high. Companies using this strategy are limited to low-volume sales and cannot achieve the cost savings that mass producers can achieve
Premium Price Survey:
This method is difficult to create and maintain, and only organizations with extensive product creation, display, and support experience can provide a high-quality experience. Companies looking to move to higher price levels can struggle in this market and lose a lot of money trying to start their own business. Successful premium pricing companies should recognize that focusing on a daily premium strategy is the only way to consistently charge the highest price for their products.
The Purpose of the Pricing Strategy:
Many game consumers will pay a high premium for the quality offered by universal car rentals, so premium pricing strategies have been used to maintain a competitive advantage and increase profits. .. Here, in order to maximize cumulative sales, we maintained high prices on weekdays throughout the simulation period and changed prices on weekends as demand changed. The reason for using the bonus is to increase 100% satisfaction with profits and demand at this price. There is an indirect relationship between price and demand, and because of the low price, the demand is high and the capacity is low, so the company may not provide the service. Increasing the unit price of an Orlando vehicle will reduce the demand for the entire market and improve profits and availability. The oversized fleet of the Orlando fleet was moved to Florida in response to unfulfilled orders. However, it should be noted that the expansion of the Florida fleet has reduced utilization and reduced profits. As a result, Florida prices rose again, reaching $51.1 on weekdays and $48.90 on weekends. Another reason to adopt a premium pricing strategy is to avoid price competition between GM and its competitors, create invincible price differences, and recognize its business and leisure customers under their own brand name. That is. "They 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 aim to maximize keep earnings of General Motors leasing companies, avoid price competition, maximize utilization and increase final market share. As a manager, I will 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. , You can maximize your profits.
Results:
After running a one-year price simulation, the highest cumulative profit was $92.3 million and last month's profit was $8.38 million.....
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