Pricing Simulation: Universal Rental Car V2 Case Study Analysis
Introduction
In this case, we are supposed to make a report on the Cars pricing simulation process for Universal Company. The company is a provider of luxury care which is based in Florida. With the help of the company pricing simulation process, we would able to apply and analyze the real-life implications of theoretical concepts such as Strategy formulation, pricing strategy, Competitive strategy, Economics and Marketing concepts, etc.
Summary Results of the Simulation for Your Best Outcome
- Cumulative Profit: $152M
- Final Market Share: 50.19%
- Final Cumulative Unit Sales: 7.37M
- Final Capacity Utilization: 81%
Overall strategic consideration
Premium Pricing Strategy:
This pricing simulation used a premium pricing strategy to get results. Premium pricing is the practice of setting higher prices to give the impression that a product must be of exceptional quality. Sometimes, the quality of the product may not improve, but the seller has invested heavily in marketing to give an impression of quality. This strategy is most effective when Consumers consider a product to be a "luxury"
product or a product of a very high quality or product design. There are quite a few barriers to entry. These barriers include significant marketing costs that attract consumer attention, various on-site service operations to support the product, a reputation for product sustainability, prepaid, and/or strict replacement warranty policies.
May occur. Sellers can limit the number of products they sell so that their products have exclusive rights. There is no replacement. The company can create this situation by proactively taking legal action against anyone trying to copy your product. The product is protected by patents and the company actively protects the rights granted by the patents.
Benefits of Premium Prices:
The advantages of using the premium pricing method are:
- Barriers to entry. When a company invests heavily in a high-end brand, it becomes difficult for its competitors to offer a competitive product at the same price without a large marketing investment.
- High profitability. Premiums can cause an unusually high gross margin. Companies adopting this strategy need to raise enough funds to offset the huge marketing costs involved.
The Downside to the Premium Price:
The disadvantages of using the premium pricing method are described below.
- The cost of the brand. The cost of setting up and maintaining an advanced pricing strategy is enormous and must be maintained until the strategy is implemented. Otherwise, consumer perception of premium brands will fail and companies will struggle to maintain their prices
- More and more competitors are challenging higher prices with cheaper products. This can cause problems, as it raises consumer awareness that the value of the entire product category is lower than before
- Sales volume. If a company adopts an advanced pricing strategy, it should limit its sales efforts to the first market. This usually limits sales. Therefore, it is difficult for a company to expect positive growth in revenue and fees at the same time. As long as the company develops in a new geographic area, we are always looking for the highest level in this market, so we can follow this strategy
- The unit price is high. Companies using this strategy are limited to low-volume sales and cannot achieve the cost savings that mass producers can achieve
Premium Price Survey:
This method is difficult to create and maintain, and only organizations with extensive product creation, display, and support experience can provide a high-quality experience. Companies looking to move to higher price levels can struggle in this market and lose a lot of money trying to start their own business. Successful premium pricing companies should recognize that focusing on a daily premium strategy is the only way to consistently charge the highest price for their products..............
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