Question

Ice Factory, a sno-cone stand, opened on the perimeter of campus two months ago. Initially, Ice Factory selected a pricing objective (strategy) that focused on maximizing volume and revenue as well as encouraging a greater volume of purchases. After two months of selling sno-cones to faculty, staff, and students, business is booming. Ice Factory has decided it is time to evaluate different pricing tactics that will generate additional sales from current customers and also sales from new customers.

In one or more fully formed paragraphs, identify the pricing objective (strategy) used when Ice Factory first opened, then list five pricing tactics Ice Factory can use to generate additional sales, and finally explain in detail how Ice Factory can implement three of those tactics to arrive at a final price for customers.

Answer 1

Answer - When the business is at early stage, we have to be very calm and composed for selecting the price of the commodity. Initially the ice factory selected a pricing objective that focused on maximising volume and revenue as well as encouraging a greater volume of purchases.In this case penetration pricing policy should be adopted as it is a competitive product and high price could not retain market share. The business is giving increasing returns which implies our product is acceptable in the market. After that we have to look for more market share and retain our customers. At this stage, various pricing techniques can be used like

• Cost plus pricing

• Competitive pricing

• Value based pricing

• Price Skimming

• Penetration Pricing

As our business is booming, then we can charge some extra amount for increasing profit but price should not be very high. At early stage , our business adopted penetration policy . After that we can adopt competitor pricing as we can rise the price but not more than our competitor 's price. This will lead to retaining customers . Once our business gained familarity then we can increase our market . We can establish our delivery channels and hike in sales leads to hike in profits. Finally we can select value based pricing policy as we reached at our customers and can judge their preferences and how much they are willing to pay. These types of pricing policies can give maximum profits and ensures customer satisfaction.