Remember, a wrong approximation of just one aspect can cost the company dearly.
Pricing: Different people have different purchasing powers; while some are low income earners, others have high income and their spending is also high. All these customers have one thing in common; they get to determine the price of a commodity being charged based on their perceived value. Therefore, any business should consider the purchasing powers of the people it sells to in the society. McDonald’s China took the opportunity of using the tier pricing model as of 2007, to sell its products at a range of prices (adjusted to consumer index and income level among other costs in the partitioned areas) to its potential consumers, who had varying purchasing powers (Ko, 4). The price given for a commodity should also be considered; it is not always that lowering prices could generate profits. In fact, some consumers could feel as if the quality is being compromised. Again, high prices could push consumers to other alternative solutions. By 2008, McDonald China among other fast food companies had raised products costs to cover for the material costs harmoniously (Ko 4). ...Show more