Question

AMB Electronics manufactures mp3 players and requires the retail stores to have a highly talented sales force and an inviting showroom. However, without a particular business practice, this is difficult to implement.The problem is that some customers benefit from one store's high quality service and then buy the product at a retailer that offers a discount without quality service. Among the different practices introduced in this chapter, which one can be used effectively to implement the demands of the manufacturer?

Answer 1

The manufacturer can manage both talented workforce and higher discount simultaneously by adopting penetration pricing model to offer deep discounts at highest quality service to remain competitive and industrial leader. However this will decrease profits due to higher operating and management costs. To manage such costs the firm should compensate highly skilled workforce based on total sales as commission basis and cut down costs on marketing medium like TV, print and out of home. Rather focus on affiliate marketing and word of mouth marketing to generate sales and offer great value for money with customers experience which is win win situation for both.

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