Larson Incorporated is a growing industry. In order for the organization to continue to be successful, it is essential the company plan for various economic conditions. In addition the company should consider factors such as pricing strategy, non-price barriers, and product differentiation. Larson Incorporated must change and adapt to overcome potential roadblocks to the company’s success such as the movement into the Asian market, increases in unemployment, advertising elements, and competition from other battery markets.
Larson is currently using the easiest pricing method known as the cost-plus pricing strategy to determine the price of their batteries. The selling price is made up of the manufacturing price along with a percentage for the profit. Although this method seems to be the easiest, there are two major setbacks. For starters, there is no way to determine customers are willing to purchase the merchandise at the estimated price and the price does not take product demand into consideration. The competition is very prominent in the American battery market; however, Larson’s previous product differentiation has been difficult (Apollo Group, 2010). The market has seen a tremendous downfall because of several factors that have had a negative impact. These factors include financial problems, increased unemployment rates, and a crisis in the housing market. All of these factors have forced consumers to spend less and save more; basically only allowing people to purchase out of necessity and not desire.
Taking all previous elements into consideration, the alternate pricing strategy would be competition-based pricing. This concept would base the price on the major competition’s price. Even with the current market, the competition-based pricing strategy would be beneficial because price is determined based on the competition. Within the Germany division at...