Question

In: Operations Management

How would you satisfy both retailers and consumers when using revenue management tactics, since the same...

How would you satisfy both retailers and consumers when using revenue management tactics, since the same two customers might actually pay different prices for the same product/service as discussed.

Solutions

Expert Solution

In a vivid manner of perspective, both the retailers and consumers are buyers. Consumer satisfaction is the main objective. But sometimes, the manufacturers can't host outlets, thus they could provide the products directly to consumers. Hence, they supply their products through retailers.
Consumers are always the end buyers. It is upon their existence, where retailers, as well as the producers, are surviving. But as a manufacturer, different prices should be imposed on the same products to two different buyers.
Retailers purchase bulk products from manufacturers. It is not practically possible for a manufacturer to distribute its products to those who need it. Thus, retailers ease this job for them. Hence the products should be provided with less value than the MRP rate. Thus, when they sell a large amount of these products, they would generate a fair amount of remuneration.
Every time, it is the consumer who should pay a higher price than the retailer for a single piece of product. And I have explained how it is beneficial for the retailers. Now we could discuss, how it would satisfy the consumers even if the price is higher when compared to the retailers. As the large section of the consumers doesn't share the same geographic location as of the manufacturer. Hence, retailers are much closer to them. Also, they provide as much as the product as per the consumer's convenience. They act as a miniature warehouse facility. Also, it would be much expensive to travel and procure the goods from the manufacturing hub. Thus, more price to consumers is reasonable as well as more worth the value. Therefore, from the perspective of the manufacturer, the entity satisfies both the retailer and the consumer.


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