MARKETING CASE APPLICATION

NAME

ANIDA BINTI AHMAD

MATRIX NO

I14100056

LECTURER NAME

MUHAMMAD NUR IKHSAN BIN MOHD SEFIAN

CASE APPLICATION

1. What do you understand by the term ‘price fixing’?

Price fixing is an agreement between participants on the same side in a market to buy
or sell a product, service, or commodity only at a fixed price, or maintain the market
conditions such that the price is maintained at a given level by controlling supply and
demand.

The intent of price fixing may be to push the price of a product as high as possible,
generally leading to profits for all sellers but may also have the goal to fix, peg, discount
or stabilize prices. The defining characteristic of price fixing is any agreement regarding
price, whether expressed or implied

2. Why price fixing is prohibited by the government?

Price fixing violates state and federal competition laws, which prohibits businesses
collusion. Business collusion is an agreement between businesses that fraudulently
prevents other businesses from being able to compete in the open market. Price fixing
violates competition law because it controls the market price or the supply and demand
of a good or service. This prohibits other businesses from being able to compete against
the businesses in the price fixing agreement, which prevents the public from being able
to expect the benefits of free competition. This violation can be implied or express, with
minimal evidence needed to prosecute.

3. Discuss the factors that might influence pricing decision in Nestle?

The factors that might influence pricing decision in Nestle is price-quality relationship.
Customers use price as an indicator of quality, particularly for products where objective
measurement of quality is not possible. Price strongly influences quality perceptions of
such products. If a product is priced higher, the instinctive judgment of the customer is
that the quality of the product must be higher, unless they can objectively justify
otherwise.
4. Based on your knowledge, what is the current pricing objective of Nestle for
Milo?

The firm has several options for addressing the price. Domestically Nestlé's Milo
manufactured finished products may be force to switch to offshore sourcing of certain
component to keep costs and prices competitive. Another factor has been audited by
the distribution in target markets. An extension or ethnocentric pricing policy describe
that the per-unit price of an item to be the same no matter where in the world the buyer
is situated. Nestlé's executive level monitor consciously on the freight and import duties
according to the Malaysia market. Compliance or polycentric pricing policy allows the
subsidiary or affiliate managers or independent distributors to create whatever price
they feel is in very good condition.

5. Most of Nestle's products are in the maturity stage, suggest the best pricing
strategy for Nestle to manage the products' life cycle.
Maturity stage is longest period in the life cycle of a firm, industry, or product, during
which sales peak and start to decline. In economics, the final stage of economic
growth characterized by high level of mass consumption.
In this case majority of Nestle product in maturity stage. So the best pricing strategy
for Nestle to manage the product’s life cycle is companies should actively manage the
trade-off between price and volume (or profit and market share) to maximize returns.
Most businesses fail to test customer value perceptions and price sensitivity after
products launch and have no idea how the critical trade-off between price and volume
shifts over time. Second, companies must make pricing decisions in the context of their
broader product portfolios because when they have multiple generations of a product
in a market, a price move for one can have important implications for others.

With these two principles in mind, companies should consider how they respond to
pricing challenges during the three major phases in the life cycle of a product or service:
launch, midlife, and late life.