Price Determination Policy
Localized vs. Standardized
Academia Inc. Copyright 2012
Smashwords Edition
Written by Academia Inc.
License Note
This ebook is licensed for your personal enjoyment only. This ebook may not be re-sold or given away to other people. If you would like to share this book with another person, please purchase an additional copy for each recipient. If you’re reading this book and did not purchase it, or it was not purchased for your use only, then please purchase your own copy. Thank you for respecting the hard work of this author.
***
Price Determination Policy
Localized vs. Standardized
***
Business to business vs. Business to General Consumers
Pricing can involve business to business sales, in which the price is negotiated and decided substantially by other business, while prices can be sold towards general customers who require that the company researches and determines an assembly reasonable price. This consideration is particularly insightful upon bringing into question the ability of the marketing company to gain from being a middle-man and still sell at competitive prices.
The middle-man company that distributes and advertises can specialize itself as a marketing company, being probable to include more than one product, to help with shipping rates and group advertisement options. Is such a marketing company better off to exist co-dependant to the original company? Let us assume that the natural progression of a company is to accumulate products so that their inventory has several, would they be advantaged in having that department become co-dependant, or even sell more than one product. The next progression of many companies is to merge, yet is it possible that the marketing and distribution should specifically be merged? Certain divisions are better off separated, such as research and development, which can work unified and remain branched off if required; yet maintain its accumulation of specialized (often customized) equipment that forges a signature capability to innovate (presumably).
Decentralized firms
Because each regional location has specific resources that can potentially allow variances in production capability, decentralized firms can choose to sell in differing prices, as opposed to shipping everyone towards one location to allow for a single transport of all inventories at a harmonized price. As far as government protection is concerned, it should be considered whether the government should monetarily protect companies that choose to sell smaller quantities (for less immediate profit) to benefit the nation, preventing companies that purchase massive bulk prices from other nations, only to sell back towards the original nation after creating unnecessary shipping and disrupting the local economy.
References:
Gary M. Erickson (July 2011) “Transfer pricing in a dynamic marketing-operations interface” Michael G. Foster School of Business, University of Washington, Box 353226, Seattle, WA 98195, USA (http://www.sciencedirect.com.ezproxy.tru.ca/science/article/pii/S0377221711006746
###