Ricing Strategies CAPABILITY TO Identify Economics Essay

Munchys uses the market-penetration costs as the costs strategy. Which means that Munchys set a low price at original stage to penetrating the market deeply and quickly to entice much of purchasers quickly to increase their market share in the meals industry. This plan comes with an inverse romantic relationship to creation and distribution cost to sales growth. Moreover, which means that the marketplace is a price hypersensitive market because low original price can create an expectation of completely low prices to the clients, it is hard to raise the prices rather than lower the costs. Furthermore, market penetrating costs may easily make a long-term customers romance.

Besides that, Munchy's has a price-adjustment strategies which is discount, allowance prices and promotional rates. The function of discount and allowance prices is to reduce prices in order to compensate customer, they could occur any place in the distribution route. The purposes of discount and allowance are reward customers, re-locate of day stock, and encourage the member of distribution channel to perform the function, and prize behavior that profit the discount issuer. Furthermore, this is of promotion pricing is when the prices is below list price or cost of the merchandise briefly or service to escalates the demand of customers. For instance, special event charges, cash rebate, low interest financing, much longer warrantee, and free maintenance.

Application of theory

The theory of pricing strategy that practice by Munchy's is Robinson-Patman Work. The aim of this theory to prevent the price discrimination by ensuring that the seller provide same price to all of the clients. The act indicate that the seller must sell the tangible goods at same price and quality to prevent the large level of buyers profits more gain than small volume level buyers. Under this act, the purchase price discrimination is allow if the dealer can prove to other people that costs of product are difference when advertising the merchandise to different retailers. Besides that, if the seller manufactures different characteristics of the same product for different stores, the price discrimination will be able to be approved. The economist believe the price discriminate cannot lead the monopoly power and great problems for competition because the earnings produced by price discrimination aren't enough and does not have any capacity to kick out the competitor. A couple of fewer and fewer business follow the Robinson-Patman Action because the function is sophisticated that the plaintiffs always vacation resort to antitrust statute and the competition defense are more effective because the merchandise has increased in style. Even now, the Robinson-Patman Action is still an antitrust statute. The take action is to avoid the top business abuse the market power and also protect the tiny business from national competitors.

Self -research and reasoning /explaination

Munchy is well-known brand in the Malaysia for their variety of food choice. Their popular products are biscuits, wafers and wafer sticks. The Munchy's always enhance their product quality constantly to meet the variety of customer. The example of product are captain munch, oat krunch, cream cracker, lexus, music, nom-nom and etc. The charges strategy that used by Munchy's is market-penetrating charges alternatively than price skimming strategic because which bring a whole lot of benefit. By practice this costing strategy, the new product will enter the market easier. But, there are much easier to reduce price alternatively than raise the price due to attitude of customer with original low price.

Munchy choose the discount and allowance charges and promotional prices as price-adjustment strategies because both of these versatile strategies can enhance the product acknowledgement and also make sure they are more famous. The discount and allowance charges is directed at the clients as a reward of the support and the most crucial is Munchy's can set up a long term relationship by using this strategy to ensure that the clients will come again with a well-known of the merchandise. In addition, the promotional rates is given less price compare to normal price intended to raise the customer demand quickly. This action will only arise on specific time period and got an expired particular date. After the promotion, Munchy will increase back the normal selling prices. This method can clear the accumulated out- of -time stock and also clear the merchandise that was no market value already. For example, like seasoning product such as clothing, sporting goods, and getaway specific items.

As bottom line, Munchy is a respective company because they're obey to the restriction rule from Robinson-Patman Action, which is a body to prevent the unfair price discrimination by ensure that the seller or retailer offered the same price to all customers at a given degree of trade.

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