Pricing and Distribution Considerations for Happy PawsThis paper will create a distribution and pricing strategy for Happy Paws Daycare (HPD). This paper will discuss HPD's target market and devise a pricing strategy and distribution channel to address that market. This will take into account the fact that Happy Paws Daycare needs to break into the market and have sufficient sales but also needs to be profitable. This paper will discuss the strategy by which HPD will determine its optimal pricing structure. This paper will also discuss the initial pricing discounts that HPD will offer to new customers. This paper will also analyze the value that HPD intends to provide and how it relates to the markup and profit margin strategy of the company.
PricingIn determining the pricing for Happy Paws Daycare's services, HPD must set their pricing to achieve optimal sales and profit balance. The lower the price the more HPD can expect to sell but the lower the expected profits (Perrault et al, 2004).
As a for profit institution HPD will need to focus mostly on profit oriented pricing.
HPD will start with a price skimming strategy for its daycare services to determine the demand for its services and achieve a maximum price that people are willing to pay. HPD's ancillary services such as pet grooming and bathing will be priced to penetrate the market and will not be a profit oriented aspect of HPD's business. It will be in this way that HPD will avoid the pitfall of price skimming in its other products. Price skimming can potentially prevent a company from keeping its clients once new competition enters the market; by being uniquely competitive with ancillary services HPD will strengthen its grip on its client base.
Happy Paws Daycare will operate within communities and as such many...