Week Eight Ch. 18 and 19

Week eight, Chapter 18
1.1 A manufacturer of office furniture decides to produce antique-style roll top desks reconfigured to accommodate personal computers. The desks will have built-in surge protectors, a platform for raising or lowering the monitor, and a number of other features. The high quality, solid-oak desks will be priced far below comparable products. The marketing manager says, ‘We’ll charge a low price and plan on a high volume to reduce our risks. Comment:

The manufacturer is using penetration pricing. The low price is designed to capture a big share of the market. The predicted high volume is associated with lowering production costs. Product development costs will take a longer time to recover with the penetration strategy. I wonder if the manufacturer has done some serious pricing research. This desk seems very savvy, and will this pricing strategy be effective given the market that would purchase this type of furniture?

2.1 What are the three basic defenses that a seller can use if accused under the Robinson-Patman Act?

The Robinson-Patman Act of 1936 is designed to stop a company from selling to two or more buyers, with a specific timeframe, selling commodities of like grade and quality at different prices. Or in other words, it’s designed to level the playing field.

The three defenses that a seller can use are: One, cost. The different prices reflect a manufacturing or quantity discount savings. Two, is market conditions. The price often times moves with the conditions of the market. An example could be perishable food, Christmas items, in January or if forced sales occur (going out of business sale). Third is competition. This is where prices are leveled if necessary to contend with rivals.

3.5 How is the ‘information age’ changing the nature of pricing?

I have not found on-line pricing these days to be that effective. Unfortunately, there are a lot of online scams out there, or selling defective, repaired products. Often, you will find a fabulous price and you may click on it and find there is no product available. Online prices are a good reference point and help make buyers more informed when they are going to make major purchases.

5.1 During a recession, what pricing strategies would you consider using to gain or maintain market share? Explain your answer.

I would use creative strategies. Hyundai is offering reassurance plus, if one would lose their job and purchase a new car, you may return that vehicle. Back to the text, value-based prices is often used. Retailers often lower the profit margin and still offer a good value to a consumer. An example would be macaroni and cheese featuring commercials saying you can feed your family for under a dollar. Nice value there. Another example would be bundling products and businesses sharing some of the pain by lowering margins. An example would be ski packages, cruise lines and vacation resorts have been offering fabulous deals that have a high perceived value.



1.1 Identify the six componenChapter 19ts of the CRM process.

The Customer Relationship Management system is a way unique way that businesses acquire, grow and hold on to customers. Everyone wants products and services. Where the rubber meets the road is for customers to be recognized (Harley Davidson, has a HOG group for owners), and they also want convenience (they don’t want to wait two years for the new Smart car). Customers need the right amount of information before they pull the trigger on a big purchase and CRM’s can help. When CRM’s come to play is with customer bases, they can tailor programs to suit the customer’s needs - based on what customers do, buy, history, and demographic information.

4.1 Assume you are the manager for a Hard Rock Café. Your boss has asked you to evaluate how the company is using its web site to gather customer data. Go to the site, and provide a detailed critique on how the site is used for capturing customer data. Comment on the types of customer data the web site is designed to capture, and explain how that data would benefit your local Hard Rock operation.

The Hard rock site has a membership area to capture potential customer information. In addition, they have an All Access card that has a value package discount on a dinner and reward program that also obtains customer information. HRC does have a CRM program for private parties and it also does require entering customer information. A survey is offered on the site, which allows for input on improving the customer service.

The data captured on the HRC site would benefit my local hard rock by knowing how many past or hard core customers are in the region. For example, All Access members would be the premium customers especially if they live near by. The All Access pass has a rewards program based on how much is spent. So HRC would have some understanding or tracking on what is hot and what is selling. Also, members are updated on current events and specials that their local rock and roll café is offering.