Arthur Brébant

STRATEGIC MANAGEMENT ACCOUNTING

APC309

UNIVERSITY of SUNDERLAND

i. The models and concepts affecting the pricing decision, critically reflecting upon their usefulness.

Pricing decision, usually made after the sum of the costs (for example: fix cost, advertising, transport) of the service or product you have to pay for the commercialisation and after the comparison with the competition. It’s the first and most simple definition. In fact it depends of a lot of factors:

- Internal factor depending on ours choices on ours decisions, for example in our company to have our production all around the world to reduce the cost of the transport to the shop. - External factor out of the control of the company as a high level of the competition on the market.

From an economic point of view, the quantity of the Demand is a function of the price and logically the more the price is high, the less the Demand will be important.

But what is interesting it is to make the biggest profit possible maximizing the relation quantity / price.

As one of the four Ps of the mix-marketing, pricing is an important factor of success for the service or product your sell, if you have a good product in the right place with a good promotion but with a too expensive price for your target it won’t work, it could also happen with a price too low for your target, people could think it’s not the good quality as it’s notify in the promotion.

So to fix the correct price you also have to determine the objective to reach, for example to increase the sales quantity, the market shares, to discourage new entrants or to get a competitive advantage and for each objective a strategy.

Our objective is to make sufficient revenue to meet our budgeted target profits so we have to define the right strategy to reach this objective.

- The strategy proposed first was the economy pricing to sell at a lower price to increase the volume and sell more and make more money,