Mile_Stone_1__Business_Recommendations

Mile Stone 1: Business Recommendations Based on Economic Projection Purpose The purpose of this paper is to review the data for Big Drive Auto (BDA) and provide pricing strategy recommendations, recommendations for non-price barriers to entry, and ideas for product differentiation for the organization. This paper will identify the types of the market the organization is operating and relate concepts to the context of BDA. Finally, there will be an analysis of the condition of profit maximization or loss minimization and an explanation of the evidence that supports these recommendations. Pricing Strategy Pricing is a very important element when considering marketing. Pricing strategy is related directly to the product’s positioning and should be an integral part of the marketing decision. It affects other marketing elements such as promotion, product features, and channel decisions. In order for BDA to be profitable the company must develop an effective pricing strategy. Though no recipe for the perfect pricing exists, BDA can use effective tools that will help with developing a pricing strategy that fits a company. BDA must position themselves in regards to how they want their targeted audience to perceive them. For example, if the company set their prices too low the consumers will question the quality of their products. On the other hand, if the prices are set too high consumers will purchase competitor’s products at a lower price. BDA should consider five forces that influence business decisions: supplier power, buyer power, competitive rivalry, threat of substitution, and threat of new entry (“Porter's Five Forces: Assessing the Balance of Power in a Business Situation,” n.d.). BDA should use their competitor’s price as a benchmark for setting their own prices. Dependent upon positions strategies the prices should be set below, above, or the same as their competitors. Using competitor’s price as a benchmark is a good tactic but not always the best tactic; so BDA should focus more on their cost structures of their own organization and decide what profits they want to make and add it to the cost to determine the selling price of their products. BDA can also make a profit and minimize loss by selling excess inventory at a discounted price to avoid storing it.