Management Simulation: Company’s Price Willing to Pay

Management Simulation Your Name Subject and Section Professor’s Name February 9, 2019 Questions: 1 After the 2nd quarter of the fiscal year, it could be seen that Global Communication Services, has gotten a market share of 29% as compared to its competitors. This value is much higher as compared to the succeeding companies such as T.A.B (19%) and BitsMarket (15%). As for the company’s specific products, GCS is able to dominate the market share for both Mercedes and Traveler, except for Workhorse. In line with our pricing strategy this result could be attributed to the gap between the prices that the company is willing to pay (Table 1) and the overall cost of services. Price willing to pay Workhorse $ 2,500 Mercedes $ 4,000 Traveller $ 3,200 Table 1: Company’s Price Willing to Pay Since Workhorse is willing to pay a lower price for the services, then it could have opted for other companies that are selling their products at a much lower rate. In contrast to this, those who are willing to pay a higher price (i.e., Mercedes and Traveller) could choose a superior product despite its higher cost. This simply suggest that pricing plays a crucial role for increasing market share, since it could encourage or dissuade the target segment from buying your product or not. 2 Generally, Advertising and Brand Management are important factors that could lead to a higher amount of sales if used correctly. On the one hand, Advertising refers to the company’s efforts to make its products known by publication or information dissemination through different mediums. Without advertisements, a product’s growth could be entirely limited to those people who knows the product themselves. On the other hand, Brand management refers to the process of “maintaining or building your brand image to create a favorable relationship with target customers” CITATION Koknd \l 1033 (Kokemuller, n.d.). It is through brand management where a business could retain customer and increase their loyalty, which is favorable for the profits. In line with our work, it could be seen that our company has chosen to spend $30,000 for Ad design for each of the products that we currently have. Brand advertising has also been spent for each of the products based on its profitability and the demand. Both of these comprise the ‘expenses’ potion of the table below. Brand Profitability    Chrome Pad  Office Pro  Office Pro Plus Brand Revenues 1,175,000 900,000 1,102,000 - Rebates 0 0 0 - Cost of Goods Sold 744,844 633,345 744,102 Gross Profit 430,156 266,655 357,898 Brand Design 0 0 0 + Ad Design 30,000 30,000 30,000 + Brand Advertising 48,795 75,714 16,000 Expenses 78,795 105,714 46,000 Brand Profit 351,361 160,941 311,898 % from Brand Revenues 30 18 28 Profit per Unit 748 358 821 Table 2: Brand Profitablity In the table above, it could be seen that a significant portion of the expense for Brand advertising has been placed for Office Pro. This is because we have decided to increase its frequency by 2 times for sports magazines and Leading Trade Journals, and once for General Business Magazine. This is to increase brand awareness for this specific product, since both Chrome Pad and Office Pro Plus, have been already rated as acceptable by Traveler and Mercedes customers, respectively. Based on our strategy, we have learnt that media preferences and placement could significantly affect the customers’ purchasing decisions. This is because greater exposure could also affect how people perceive a particular ...