When purchasing a computer for home usage numerous discriminating value factors, including price range, would trigger the purchase decision. In most circumstances, laptops are more expensive than desktop computers (Nwankwo, Hamelin, and Khaled 736). More powerful and newer computers are also more expensive. As a result, what one decides to buy is determined by how much money they are willing to pay. Moreover, selected type is a consideration. There are various types of computers, including tablets, desktops, laptops, and hybrids.
Another value driver that influences a computer purchase choice is the operating system. For example, OSX is only functional with Mac Books while windows have numerous choices of hardware producers and configurations (Nwankwo, Hamelin, and Khaled 737). Furthermore, one will consider the size of the hard drive depending on the volume of files that need to be stored, the capacity of RAM based on how much the computer will run at once and the CPU if the computer will be necessary to operate faster and process many things at once.
Pricing Policies
A fixed price system is a pricing strategy which involves setting a price and leaving it constant for a given period, for example, the menu based prices (Dahl 234). In fixed pricing policies the consumer's negotiation capacity is manipulated by the provision of high-value goods and services which gives satisfaction to the clients. The contentment comes when the customers are convinced that the value they get is proportional to the prices they pay.
Fixed pricing helps to remove consumers' uncertainty about prices especially when the market scope changes or when there are market fluctuations. Moreover, the risks arising from the rise in the production cost are not transferred to the customers since the prices are fixed hence the organization bears all the risk (Dahl 234). Given that the clients' bargaining power is removed through fixed menu prices, the compensation of companies provides a variety of options which gives customers ability to select from various items.
Pricing and the Product Life Cycle
Product life cycle has multiple stages which are development, introduction, growth, maturity and decline, though price strategies affect only four stages of the product life cycle (Bartlett and Twineham 1917). Taking an example of Samsung galaxy S5 mobile phone, the introduction phase is characterized with increased advertisement and low sale to make consumers aware of the phone. Price is set high. A skim pricing strategy is used to increase profit generation as early adopters go for the phone and the company seek to compensate for the production cost. At the growth stage, more clients obtain the information about the phone leading to increased sales. At this point, if the demand is high the price is left at a high level. The price can also be lowered to attract more customers.
At the maturity stage is where the product is most profitable because there is solid brand awareness. At this stage, the price of the phone is reduced to react to competition and also to escape a price bar. The final stage is the decline stage (Bartlett and Twineham 1919). Here the market becomes saturated and sales start reducing. The demand for the phone reduces drastically. At this stage, the price of the phone is lowered to improve the stock of discontinued phones.
Performance Measure and Incentives
An organization has to select appropriate performance measures for its stimulus plan to increase the profits of the business. In creating an efficient incentive plan, a company has to align inter-reliant elements of the firm in a manner that shows influential behaviour standards for the workers. For instance, profit-based allocation (Indjejikian, Raffi, and Rajna et al., 1230). In this measure, the business sets aside a certain percentage of the annual profit to the workforce. The allocated amount is shared by the employees yearly.
The organization can also target key performance indicators
The business should choose incentive plan drivers that can be controlled by an employee or is within their reach (Indjejikian, Raffi, and Rajan et al., 1231). This approach will enhance the focus of the workers on their best-positioned areas which in turn improves profits.
Importance of Costs
Both costs and sales volume influence profitability. Gross profit is the difference obtained when the cost of the products sold/ variable cost is deducted from the total sales. And the net profit is the difference between gross profit and fixed costs (Christopher, Payne, and Ballantyne 245). For instance, if the total sale is valued at $20,000, variable cost at $10,000, and fixed cost at $5000, the gross profit will be $10,000 and the net profit $5000.
Assuming every other factor is kept constant
higher costs of production lead to lower profits than the lower costs that generate higher profits. Therefore, when an organization seeks to increase its profits, it can cut its cost through bargaining to lower the cost of materials, labor reductions, or minimizing inefficiency in the operations of the business. On the other hand, sales volume also affects profit generation. For instance, a company may sell 1000 units of a given product with $20,000 as the total sales volume in a particular period. If these sales are more than the variable cost, then every additional unit of the sales volume raises the gross profit and net income (Christopher, Payne, and Ballantyne 245). Therefore, as long as lowering the cost does not affect revenue and sales volume is kept constant, profits will increase.
Sustainable Competitive Advantages
Sustainable competitive advantages refer to those benefits that cannot be easily copied and can, therefore, be maintained for a period (Liu 2823). Companies achieve sustainable product advantage for commodities through various strategies including customer loyalty. Through loyalty programs, positioning, and branding consumer show commitment in purchasing goods and services from a particular business. Uniqueness is another strategy. Some commodities are available from specific organizations. For instance, craftsman man equipment is only found from Sears.
Companies also achieve sustainable competitive advantage through customer services
Some businesses establish superior consumer services delivery that provides incomparable reputation. Lastly is multiple source lead (Liu 2823). McDonald's, for example, is recognized for hot, fast, and clean food. Besides, the company has a high-grade facility, affordable vices meals and advanced customer service with a solid reputation for sells of food.
Research Studies
In designing a trade-off examination for a new washing machine, several factors have to be evaluated including the features (Mungle, Santosh, and Mitch et al., 1961). You will have to consider the loading capacity of the machine. You may also need to check the energy seal to confirm that the washer is an energy saver among other things.
The size of the machine is also considered
One will buy a small or larger washing machine depending on the extent of the family (Mungle, Santosh, and Mitch et al., 1961). The brand of the machine is another factor. Names often reflect quality. Some brands are known to last longer whereas others have high- tech operations. Examples of well-known brands of the washing machine are Samsung, Whirlpool, and LG among others.
Work Cited
Bartlett, Dean, and John Twineham. "Product Life Cycle." Encyclopedia of Corporate Social Responsibility. Springer Berlin Heidelberg, 2013. 1914-1920.
Christopher, Martin, Adrian Payne, and David Ballantyne. Relationship marketing. Taylor & Francis, 2013. Print.
Dahl, Carol. International Energy Markets: Understanding Pricing, Policies, & Profits. PennWell Books, 2015. Pint.
Indjejikian, Raffi and Rajna et al. "Earnings targets and annual bonus incentives." The Accounting Review 89.4 (2014): 1227-1258.
Liu, Yang. "Sustainable competitive advantage in turbulent business environments." International Journal of Production Research 51.10 (2013): 2821-2841.
Mungle, Santosh, and mitch et al. "A fuzzy clustering-based genetic algorithm approach for time-cost-quality trade-off problems: A case study of highway construction project." Engineering Applications of Artificial Intelligence 26.8 (2013): 1953-1966.
Nwankwo, Sonny, Nicolas Hamelin, and Meryem Khaled. "Consumer values, motivation and purchase intention for luxury goods." Journal of Retailing and Consumer Services 21.5 (2014): 735-744.
