Please can someone provide me with a feedback on this discussion post below. Thanks
Pricing Strategies Interview
This interview is with my brother, Brand Phan, the informatics director of Cigna, a global health service company. Cigna is based in Bloomfield, Connecticut, their revenue is 42 billion and employees number 40,000 plus.
What is the company’s pricing objective?
The company’s objectives are a mix of increase market share and maximizing profits.
How sensitive are the company’s target customers to
changes in price?
The target customers are moderately price sensitive. Having healthcare is a necessity. People want the best care available for the best price they can get and they are aware of all the options available to them. Also, if they have a preexisting condition or have a doctor or hospital they have come to trust, they can prefer to stay with healthcare they have regardless of price. This places the target customer at moderately price sensitive.
Do they have some target segments that are less price
sensitive than others?
The target segment that would typically be less price sensitive would be our chronic population. They tend to be older, have a preexisting condition, would have met their deductibles and they are willing to pay for continuity of care.
How much consideration does the company give to
competitors’ prices when setting their own?
When setting our own prices, 100% of our consideration is given to what the competitors prices are. Our prices are very similar to our competitors. But the key differentiator for us is doctor satisfaction, patient claim turnaround times and performance guarantees. We want a strategy equilibrium of customers and price, but we don’t want to price ourselves out of the competition.
What method of pricing do they use to arrive at the
final price for the customer?
The method of pricing they use to arrive at the final prices when setting their own is competitive intel. There is usually a third-party vendor that consults and goes to all the insurance companies to request proposals before we go out to bid. The pricing methods that would most closely related to this company would be perceived-value pricing and going-rate pricing. Perceived value is mad up of a host of inputs, such as the buyer’s image of product performance, the channel deliverables, the warranty quality, customer support and softer attributes such as the supplier’s reputation, trustworthiness and esteem. In going-rate pricing, the firm bases its price largely on competitors’ prices in oligopolistic industries that sell a commodity such as steel, paper or fertilizer, all firms normally charge the same price (Kohler & Keller, 2016)
the total discussion is good, but if you focus on the total available of pricing patterns and models in the system, it helps you to evaluate each strategy and fix one which really helps both service provider and service taker. the other aspect you missed is relationship between quality of service and price charge for the service. In general there is a relationship between these two aspects, the more the price, the more the quality.
do the pricing stragies provides you sufficient profits or not? if yes, is there any chance to minimize the price by losing some profits? if the profits are not sufficient, then how and what measures you takes to improves the numbers etc.
The entire portion is good, it may be best if you focused on the above said issues also.
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