MS-9 Question 5

What in your opinion will be an appropriate price policy if the demand reaches its saturation point and the substitute products are likely to enter the market? Explain with the help of examples.

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WHEN WE SAY ''DEMAND REACHING SATURATION''IT MEANS
DEMAND = SUPPLY.IF YOU INCREASE THE SUPPLY, THE CUSTOMERS WILL SEEK PRICE REDUCTION.IF YOU INCREASE THE DEMAND, THE SUBSTITUTES WILL CREEP IN.
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UNDER THIS CIRCUMSTANCE, YOU SHOULD GO FORVALUE-BASED PRICING
Value pricers adhere to the thinking that the optimal selling price is a reflection of a product or service's perceived value by customers, not just the company's costs to produce or provide a product or service. The value of a product or service is derived from customer needs, preferences, expectations, and financial resources as well as from competitors' offerings. Consequently, this approach calls for managers to query customers and research the market to determine how much they value a product or service. In addition, managers must compare their products or services with those of their competitors to identify their value advantages and disadvantages.Yet, value-based pricing is not just creating customer satisfaction or making sales because customer satisfaction may be achieved through discounting alone, a pricing strategy that could also lead to greater sales. However, discounting may not necessarily lead to profitability. Value pricing involves setting prices to increase profitability by tapping into more of a product or service's value attributes. This approach to pricing also depends heavily on strong advertising, especially for new products or services, in order to communicate the value of products or services to customers and to motivate customers to pay more if necessary for the value provided by these products or services.
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A NUMBER OF BUSINESS ELEMENTS YOU MUST REVIEWAT THIS JUNCTION,
BEFORE YOU TOUCH THE PRICE.PRICE IS THE LAST ELEMENT TO TINKER WITH.
DEMAND FORECASTING
—Keep it simple and accurate. Predict demand at any combination of product and location nodes. Demand Forecasting is designed and synchronized to produce the optimal forecast input for Inventory Optimization, financial or assortment planning. MULTI-CHANNEL PLANNING—Integrate planning for your web, catalog and store channels to reduce redundancy and increase efficiency, while still respecting the unique characteristics of each channel. FINANCIAL PLANNING
—Plan top-down or bottom-up with an easy to use, but powerful solution that manages multiple versions of plans across categories, channels and time periods. ASSORTMENT PLANNING—Customize assortments by channel. See buyers' changes immediately so you can reach your financial goals with the right mix of products.
ITEM PLANNING
—Synchronize with assortment planning to support time-phased planning and tracking for multiple key performance indicators. Micro-manage just your key items or use it to plan all your seasonal items to determine the optimum receipt flows.
PROMOTION PLANNING
—Coordinate all aspects of your promotions from one solution. Create, forecast and track events and feed anticipated lift to replenishment to avoid stock-outs on featured products. CUSTOMER CLUSTERING
--Group stores by performance, customer profile, size or any other characteristics to stay in touch with your customers' needs without adding hundreds of store planners.
Setting up assortments. Integrates with Assortment Planning to select, plan and manage different promotional product assortments for various locations. Maintaining data. Supports promotion-specific attributes and measures, including page number, display fixture, offer and price zone. Building channel-specific promotions. Tracks data based on each channel's unique criteria. Gaining visibility for your products. Consolidates plans for analysis and purchasing across channels. Managing promotion information. Uses a central repository for events, products, vendors and locations. Monitoring item demand. Automatically updates forecasts based on actual performance data. Maintaining optimum inventory. Automatically feeds orders to PLENISHMENT.
ANOTHER IMPORTANT FACTOR
-- Inventory Optimization can help you get it right, every time:REPLENISHMENT —Profitable replenishment is a strategic advantage. Selling generates revenue, but smarter replenishment generates profit. Turn over inventory faster by ensuring you have what you need, where you need it, when you need it.
MULTI ECHELON
—Manage forecasting and replenishment across all your distribution channels from one application.
VENDOR MANAGED INVENTORY
—Share your inventory data with suppliers so they can time shipments and manage production—and you can please customers.
COLLABORATION GATEWAY
—Give valued partners access to inventory, replenishment events and other specific data involving goods they sell to you or buy from you. Lifecycle Management unites three powerful modules to put you in control of the entire order management process.DISTRIBUTED ORDER MANAGEMENT
—Keep your supply and customer demand in profitable balance. REVERSE LOGISTICS MANAGEMENT
—Make returns efficient, accurate and easy. Capture customer information, track return reasons, and automatically select the optimal mode of transportation to make returns a source of valuable customer and quality information. Automate vendor rules and streamline return-to-vendor credit process. Improve vendor buyback, reduce cycle time and improve open-to-buy. CUSTOMER GATEWAY
—Let customers and stores place, track and confirm their orders on line, giving you proof of receipt, opportunities for feedback—and happier customers
Transportation Lifecycle Management connects your transportation network from procurement to delivery
TRANSPORTATION PLANNING AND EXECUTION
—Optimally manage all your transportation activities so you can coordinate, redirect and stay on schedule. Deliver superior service to your customers with full visibility and event management capabilities.
LOGISTICS GATEWAY
—Share critical data in real time to keep all your transportation partners working together. Enable communication with suppliers and carriers to request shipments, provide updates and settle financial concerns.
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WITH THE ABOVE LISTED TECHNIQUES,
-you can remove the wastages.
-you can improve efficiency
-you can save costetc etc.