Glitzz - Devising a Pricing Strategy
Case – Glitzz: Devising a Pricing Strategy
What factors influence the pricing decisions for a product such as Glitzz? Analyze these factors and comment on the range of prices that can be set for Glitzz
Q1. Factors influencing the pricing decisions for Glitzz include the firm’s objectives, customer factors, and competitive factors. Constraints such as costs also play an important role in influencing pricing decision. Together, they narrow the range of price reasonable for Glitzz.
The target profit of the firm is an important factor affecting Glitzz’s pricing decision. As Glitzz is a start-up company introducing a new product to the market, Glitzz do not have to emphasize on a target return objective or a maximizing current profit objective, but the pricing Glitzz sets should be one that helps manage long-run profits. This means that Glitzz should not aim for immediate profit, but instead opt to achieve a higher market share by developing quality product and distributing them at a relatively low price. The firm will then expect to make greater profits later because of its increased market share. However, as most start-up firms face tight cash flow, the pricing for Glitzz has to be high enough to ensure that profit covers the cost sufficiently for the firm to remain in business.
The price of Glitzz is also constrained by the type of market which it competes in, which is a monopolistic competition. As there are many private or global brands of jewelry cleaners which Glitzz has to compete with, both price competition and nonprice competition exist. Hence, one of the important pricing decision factors is the competitors’ prices. Glitzz must know what specific prices its present competitors are charging now and the prices of local brand Glitzz should be lower than that of global brands.
Competitors’ pricing also affects pricing decision. One of Glitzz’s competitors is Connoisseurs and is priced between S$14.00 to S$16.90 at retailers. Brilliant Restorer is
What factors influence the pricing decisions for a product such as Glitzz? Analyze these factors and comment on the range of prices that can be set for Glitzz
Q1. Factors influencing the pricing decisions for Glitzz include the firm’s objectives, customer factors, and competitive factors. Constraints such as costs also play an important role in influencing pricing decision. Together, they narrow the range of price reasonable for Glitzz.
The target profit of the firm is an important factor affecting Glitzz’s pricing decision. As Glitzz is a start-up company introducing a new product to the market, Glitzz do not have to emphasize on a target return objective or a maximizing current profit objective, but the pricing Glitzz sets should be one that helps manage long-run profits. This means that Glitzz should not aim for immediate profit, but instead opt to achieve a higher market share by developing quality product and distributing them at a relatively low price. The firm will then expect to make greater profits later because of its increased market share. However, as most start-up firms face tight cash flow, the pricing for Glitzz has to be high enough to ensure that profit covers the cost sufficiently for the firm to remain in business.
The price of Glitzz is also constrained by the type of market which it competes in, which is a monopolistic competition. As there are many private or global brands of jewelry cleaners which Glitzz has to compete with, both price competition and nonprice competition exist. Hence, one of the important pricing decision factors is the competitors’ prices. Glitzz must know what specific prices its present competitors are charging now and the prices of local brand Glitzz should be lower than that of global brands.
Competitors’ pricing also affects pricing decision. One of Glitzz’s competitors is Connoisseurs and is priced between S$14.00 to S$16.90 at retailers. Brilliant Restorer is