BUSINESS COMPUTING

Business Computing: Metrobooks Pricing Analysis



Executive Summary

A traditional bricks 'n mortar (i.e. non-web) bookseller named as Metrobooks having various stores situated all over Australia. However, the management of the company has sensed that the competition in the market is increasing from not from any other physical stores, but from online book stores. This paper will serve as a pricing report for analysis of the prices offered by Metrobooks and its other competitors. For this report, five books have been selected from Metrobooks stocks and have been compared to three different online companies. After the analysis, it has been concluded that two books are being sold higher than the online prices at Metrobooks, however, remaining three are available at lower cost at Metrobooks. After the market analysis, it has been recommended for the company to switch to online medium as well using Predatory prices approach to grab the large share of market.

Table of Contents

Introduction4

Pricing Trends4

Competitive Market and Competitive Firms5

Analysis6

Conclusion and Recommendations7

Predatory Prices7

References8

Business Computing: Metrobooks Pricing Analysis

Introduction

A traditional bricks 'n mortar (i.e. non-web) bookseller named as Metrobooks having various stores situated all over Australia. The management teams at Metrobooks have become aware that their strongest competition was now coming from Web-based book retailers, not other local booksellers. With a view to improving their sales performance on bestselling books, and possibly moving onto the web themselves at some stage, the company has decided to test their products and prices against the Web. In this connection, this paper will carry out a basic research and pricing analysis for the company with its online competitors to prepare a report, so that the company can determine its future policies.

Pricing Trends

Before analyzing the pricing in Australia, it is pertinent to discuss the pricing trends, so that analysis could be done smoothly. Pricing in modern markets is a process. Pricing is set by a company to mark what it will receive for its products (Mendelson, 2004). The cost of producing goods includes the cost of raw materials, labor, management, profits for shareholders, and other factors. The actual price will be the cost the company sets after it has averaged in costs for incentives, competition, discounts, and promotions. Traders in primitive markets exchange goods and services in the belief that the exchange results in a value gain.

With the development of trading, exchanges were made in terms of in-kind valuations. With the development of money and more sophisticated markets, prices were applied to goods and services as valuations were derived from supply, demand, quality, opportunity, and other factors (Osborne, & Rubinstein, 1994). Setting prices for goods and services is necessary to facilitate trade. The process is somewhat subjective because the value of goods and services is priced according to what buyers and users believe they are worth (Cabral, 2000). Pricing in modern markets is set as a part of the financing of goods or services. The prices are set according to the nature of the product or service, its location, and how much money may be necessary to ...