You Make the Call, #3, Chapter 16, Page: 495
Question #1 What does the nature of this industry suggest about the elasticity of demand affecting Bowlin’s pricing?
In the information given about Bowlin, it is said that it is not a must for the firm to reduce its price but rather improve the quality of its work. This means that the service provided by Bowlin is a necessity and therefore, the price reduction might have less influence on the customer demand on the service of the company. The service provided is fairly elastic but its elasticity relies on the quality of the service offered by the responsible firm other than the price of the service (p. 476).
Question #2 What types of costs should Bowlin evaluate when he is determining his break-even point?
Based on the fact that the quality of the service offered by the Bowlin is what would determine the level of quantity demanded of the firm’s services, there is need to improve the quality of service provided by the firm. Therefore, the focus point of Bowlin should be at the total costs of providing high quality services of removal of trees, spraying and pruning (Moore, & Palich, 475). These costs would include; fixed costs and variable costs of safely removing branches and trees fallen during service provision, safe falling of trees, and the use of environmentally friendly equipments and machines.
Fixed and variable costs are very important aspects when it comes to pricing in small businesses such as Bowlin. Variable costs are those costs that change in the same proportionate change in the change of the product or service quantity (p. 475). In this case Bowlin increases, the variable costs would also increase. se, when the service provided by variable costs increases when the value of the products or service increase and vice versa is true. On the other hand, fixed costs are those costs that remain constant whenever any changes take place in the quantity of quantity sold. These costs are very important to small businesses such as Bowlin when it comes to pricing of its services.
Question #3 What is pricing strategies could Bowlin adopt to further his long-term success in this market?
After determining the variable and fixed costs that the firm needs to use in providing removal of trees, spraying and pruning services, using the average pricing technique in determining its prices would be an appropriate strategy to apply in price determination in the future. This would be applied after the service provision in the first year under the same or existing price (Moore, & Palich, 475). Based on the concept of average pricing in small businesses like Bowlin, is done by dividing the fixed and variable costs (total costs) of the previous period by the sold quantity in the current period. The result from this would give the business an average cost and the business then uses this outcome to set the price to be used by the business currently.
Question #4 How can the high quality of Bowlin’s work be used to justify somewhat higher price quotes?
The high quality of the service provided by Bowlin would not be realized to far extend in the region of 200,000 residents as indicated. As such, the firm should apply advertisement means as a means of informing people about the firm and the good quality offered by the firm. The definition of advertisement is the presentation of the ideas about the goods or the firm to the customers in the market with an aim of informing, persuading and reminding them to purchase the product. There are two types of advertisement institutional advertisement and product or service advertisement (p. 506). Bowlin is a firm that is not yet known in the region with the customers who are need of the service it offers (Capon, & Hulbert, 365). Therefore, the first thing should be to perform institutional advertisement for the firm to be recognized by many customers of the service it provides. After being known, the firm should engage fully in service advertisement which would aim at informing the customers about the service it offers and how good it does it (Moore, & Palich, 506). This would resultantly attract more customers to order for Bowlin firm to perform the services of removing trees, pruning and spraying.
The business should as well use appropriate means of promoting its business promotional website since there are search engines where if a business puts its website there in order to reach new customers in the market, they might not be appropriate. This is because search engines as Google or Yahoo are well known for in depth researches and account logins rather than promoting business websites. In this case, the appropriate search engine would be bingo. In addition to that, the business should as well put its URL on business cards, packaging, letterheads and print promotions (Moore, & Palich, 517). Therefore, the effectiveness of promotional mean chosen by a small business relies on the probability of that particular promotion attracting customers and retaining them through its effectiveness which at last increases the firm’s sales and reduce chances of the firm loosing revenue either directly or indirectly.
You Make the Call, #3, Chapter 17, Page: 519
Situation 3:
Question # 1 There is more than a 10-year age difference between members of Panchero’s top management team and Joel Johnson. Do you think that difference has contributed to Johnson’s effectiveness in social networking? Why or why not?
Social networking is a large field which requires experienced operation and therefore, Johnson being a young employee has studied during this techno-culture period and therefore, undertsnads more about networking from school. This implies that his age difference with the top management team of Panchero greatly contributes towards his networking effectiveness. This is why what he does in networking aims at mainly promoting the name and the quality of service offered at his restaurant. He understands the role of networking as a key tool of market promotion.
Question # 2 Is it ethical for Johnson to be recommending the restaurant chain where he works? Why or why not?
Johnson recommending customers who ask for places to eat at the restaurant chain of Panchero is commercially ethical. He is only playing his promotional role as an employee of the firm and as well an advertisement agent in the field. Advertisement according to the definition refers to any means used to inform, persuade, influence and remind customers of a firm, its products or services in order for them to buy from there. Therefore, Johnson as an advertisement agent and employee of the firm has legal and ethical rights to perform his role of informing, persuading and reminding people of their firm and services they offer. The act of Johnson is of no negative impact on other firms that offer similar services but rather increase the customer demands on their firm.
Question # 3 Have you ever posted any comments on a website about a business that you have visited? Do you check for customer comments before you shop at a particular business?
I personally have taken part in posting comments on websites of firm and social websites as well to encourage people to shop there if the service I received was recommendable. If not, I have as well been genuine and fair enough to post a negative comment so that customers do not go there and regret their decision. My first step before I go to any shopping mole or place to shop is to check customer comments on their website and on social websites. These comments serve an important role in redirecting customers to where services are effective or products of high quality are.
- Experiential Exercise: Chapter 16;#1 Pg 495)
Question # 1: Interview a small business owner regarding his or her pricing strategy. Try to ascertain whether the strategy being used reflects the total and variable costs of the business. Prepare a report on your findings.
The main pricing strategy used by many small businesses is the average pricing strategy. The average pricing technique bases its focus on the changes in the fixed and variable costs of the business. Fixed costs refer to costs that remain constant no matter how much the sales of the firm changes. Examples of fixed costs are costs of material used by the company in producing the products, the expenses incurred in carrying out product and institutional advertisement, and the salaries of the employees or salesperson that remain constant whether sales are made or not. On the other hand variable costs refer to costs that change along with the change in sales of the firm.
Both fixed and variable costs are very important to small businesses in pricing their products. Based on the concept of average pricing in small businesses, the price is determined by first dividing the fixed and variable costs (total costs) of the previous period by the sold quantity in the current period. The result from this would give the business an average cost and the business then uses this outcome to set the price to be used by the business currently. This is the same strategy and concept that business firm I conducted uses in setting up its prices for future.
Experiential Exercise: Chapter 17;#3, Pg 519)
Question # 3: Evaluate the promotional effectiveness of small business website.
Promotional means for a small e-commerce business should be effective in achieving its market goal of informing customers of the new price, commodities and ideas about the firm. In the case of using website promotion, the business should choose a high quality web design for faster downloading of anything a customer wants to know about the business operations, varieties of the firm’s commodities and the price ranges. This type of website design would attract more customers on the site and keep them unlike a slow downloading website design which would bias customers and send them away (p. 517).
The business should as well use appropriate means of promoting its business promotional website since there are search engines where if a business puts its website there in order to reach new customers in the market, they might not be appropriate. This is because search engines as Google or Yahoo are well known for in depth researches and account logins rather than promoting business websites. In this case, the appropriate search engine would be bingo. In addition to that, the business should as well put its URL on business cards, packaging, letterheads and print promotions (Moore, & Palich, 517). Therefore, the effectiveness of promotional mean chosen by a small business relies on the probability of that particular promotion attracting customers and retaining them through its effectiveness which at last increases the firm’s sales and reduce chances of the firm loosing revenue either directly or indirectly.
Work Cited:
Moore, W, Carlos. Palich, E, Leslie. Small Business Management with Infotrac: An Entrepreneurial Emphasis, Volume of small Business Management: An Entrepreneurial Emphasis, Small Business Management: Entrepreneurial Emphasis, Edition 13, New York, Cengage Learning, 2006, P. 467
Capon, Noel, & Hulbert, M, James. Managing Marketing in the Twenty-first Century, New York, Wessex Incorporated, 2007, 365
