Discussion-Zac Assignment | Homework Help Websites
Read the attachement which was an iterview conducted by a fellow student on a business manager/ owner and give a response/ advice ino 150-200 words
What is the company’s pricing objective?
The person I interviewed was an owner and operator of a local brewery. After discussing what their pricing objectives were it seemed to be a few things. When they had originally started the company, when they first got their beers in local markets, and once they were an established company. All seemed to be a little different objectives. Initially they had priced their beers to break even on their investments to build a broader customer base. Once they had been around a few years they then raised prices and made new beers to make more of a profit. Finally once they had started canning and distributing to local stores they priced their products low enough to compete with other craft brewing companies but enough to make profit still.
How sensitive are the company’s target customers to changes in price?
Originally he said that customers would be fairly sensitive to more expensive beers as they had not established themselves yet. Nor proven their beer was worth the price. Now after almost 10 years they have a large enough “regular” crowd that price shifts do not really phase the target customer. They seem to be willing to pay for the familiar product. So overall it would be a moderate sensitivity to price change.
Do they have some target segments that are less price sensitive than others?
This was actually an interesting question because as it turns out the customers who are either not as into craft beer, new to the area, never been to their store, or tried their product are actually a little more sensitive. The customers he called regulars, craft brew connoisseurs, or “beer snobs” were far less sensitive. So the more unfamiliar segments seemed to be more sensitive than the other segments.
How much consideration does the company give to competitors’ prices when setting their own?
Interestingly enough, he said they do not consider anyone else’s prices when they are selling within their own brewery. As there is no competition for them. However, they do need to be aware of all the other competitors when they are trying to sell in the local markets around town. Knowing the vast amount of choices of craft beer in the area they may have to lower prices to entice more customers to buy. Then that might tempt them to come to the brewery directly where the prices can be a bit higher but you also get an experience from it.
What method of pricing do they use to arrive at the final price for the customer?
Overall I would say they use a competition-based pricing. Reason being is they have to focus so hard on making sure that their product is bought in a rather saturated local market of craft beers. However within the brewery they use a cost-based pricing (or cost-plus pricing). They determine how much it costs to make and sell at par or just above.