Interim Analysis and Recommendations Report

In this report, I will try to identify some elements of our team’s (team E) pricing strategy after the first three rounds of the Introduction Manufacturing Game while recognizing successful or not pricing technics and making some recommendations for the next two rounds in terms of task assignments, sharing of information, decision making and plan execution.

According to the Manufacturing Participants Guide the optimal pricing depends on many factors:

1. the prices charged by competitors. We can observe the team that won the game (team A) had in average higher prices than our team for almost all the products, in all rounds. The team that got the last place (team B) had in average the lower prices (Figure 1 and 2). As we were constantly monitoring the average market prices, this affected our pricing strategy. We should have a more clear strategy from the beginning of the game.
2. the size and cost of the product. We tried to keep prices above cost.
3. the customer type. Even if we had only one type of customer, it is very important that the customer makes orders of 4 products. We should have used different price strategy by offering best price as a package (4 items).
4. the level of inventory on hand. As we can see on Figure 3, we completed the round 1 with few inventory. This indicates high volume of sales, but due to our low prices we had low margin. At the second round, we had an issue with the production. As a result, we had stock out days and we couldn’t sell. We did not realized that early. We thought that it was a setting price issue and for this reason we decided to lower our prices. Thus, when the production gave us products, we sell them in low prices. We can observe that in round 2 and 3 we have no inventory in many products.
5. Ultimately the strategy of the firm including its advertising strategy. We did not had a specific pricing strategy from the beginning and we were trying to finetune our prices according to average prices.

To sum up, regarding the pricing I believe that we should have keep higher prices in the first round and keep inventory, while in the second and third round we could focus on markets with limited market share and offer lower prices there as a package of 4 products. Although, as we sell products at package of 4 we should have keep in mind to keep high prices and wait until the other teams run out of stock. Then, we could sell at higher margins.