Larson Inc., an international corporation that has operated in America for five years and in Germany for more than 15 years, is discovering economic hard times within the United States. Consumers are constrained to purchase less due the rise of unemployment. Larson Inc. is experiencing the effects through decreased profits. Larson Inc., as a decentralized decision-making corporation has decided to centralize major decision-making such as pricing and marketing to advance Larson's profits. Larson Inc. will assemble a board of executives to take a deeper look at current processes in pricing and marketing strategies to enhance the processes or develop innovative processes to build profit. The board will recommend pricing strategies, non-price barriers to entry and offer ideas for product differentiation for Larson Inc.
Pricing Strategy RecommendationEstablishing a new pricing strategy is one of the key elements in Larson Inc.'s dilemma. Pricing strategies are important to a business; the right markup on goods and services ensures a company's profit longevity.
For Larson Inc. its current pricing strategy reflects a low profit margin for the company. Currently Larson Inc. is using the cost-plus pricing method. Many companies use this method as a retail markup strategy when pricing service and product contracts. Even though this is a simple method and is known for bringing market share and profit to companies it has not been a lucrative method for Larson Inc.
It is time for Larson Inc. to take a moment and rethink its marketing direction. Larson Inc. should review its marketing strategy and marketing mix, calculate its costs, profits and losses, estimate the demand curve, look into the environmental factors and set new pricing objectives. Because current reports have shown Larson Inc. is in a struggle to keep up with competition, branding, advertisement, production, and funding, Larson Inc. should move forward with a...