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Marketing mix - price case study. L & C garage equipment services ltd. is a Sealey distributor. Sealey has a retail price which then L & C adds a 30% profit margin to. This is called cost plus pricing which is the most common form of pricing.

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Introduction

Price L & C garage equipment services ltd. is a Sealey distributor. Sealey has a retail price which then L & C adds a 30% profit margin to. This is called cost plus pricing which is the most common form of pricing. Also the manager stated in the interview that he also used competitor based pricing where he charges similar prices to other firms and if possible he offers discounted prices if offered by Sealey distributor. Sub Total: � 495.00 VAT: � 74.25 TOTAL: � 569.25 * M.O.T. accessories - Competitor's price: �687.00 + V.A.T. Cash\Net: �4,950.00 V.A.T. 15% � 742.50 TOTAL: �5,692.50 * Lift Model - Competitor's price: �6,950.00 + V.A.T. Cash Sale/Net �495.00 V.A.T. � 74.25 Total: �569.25 * Tools - Competitor's price: �712.50 + V.A.T. Here I have compared L & C's prices of the most frequently bought items compared to its competitors, Andrew Page ltd. and you can see L & C's prices are cheaper and in some cases by a substantial amount. It is important to know what your competitors are charging as customers will check out the prices of your competitors. ...read more.

Middle

The potential buyer will most likely assume that L & C's product is better simply because it costs more. This shows that L & C garages prices are more considerable than his competition as this is why many of his customers choose to use his company rather than other e.g. Andrew Page ltd. But because Andrew Page is a better known brand people might choose to go to his company as they know quality will be assured, this means L & C will still lose customers even though their prices are cheaper. So they are not getting enough customers they would have liked when they dropped their prices, meaning that this strategy is not working out and they might need to change it. Or L & C could promote its cheaper prices but also getting the message across that quality is still assured with a good service and quick delivery. But as there is a recession on L & C might have thought the much affordable prices they have to offer will attract customers as everyone is looking for the best deal and once they have used their services then they will be satisfied and become a repeat customer. ...read more.

Conclusion

So if L & C's competitor's prices change in whatever way them L & C can easily adjust to that but this will come with consequences either way. But pricing decisions made hastily without sufficient research, analysis, and strategic evaluation can lead to the marketing organisation losing revenue. Prices set too high can also impact revenue as it prevents interested customers from purchasing the product. Setting the right price level often takes considerable market knowledge and, especially with new products, testing of different pricing options. So L & C has to make sure they have made the right decision and not set their prices to low to beat its competitors as it doesn't want to put the question in customers mind of why the price is that low. Often customers' perception of a product is formed as soon as they learn the price. L & C garages equipment services ltd. seems to be very successful when compared with competitors prices but price is not always why a customer chooses a business especially if there is not much difference. So even though the business might have competitive prices they might need to work on other aspects of the business to capture the market. ...read more.

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