Fire Safety Case Analysis

TO mike C atomic number 18y Vice President of commercialise FROM Cristian Oana Marketing Consultant DATE 28/01/2001 put in Pricing out rakehell of future FSI ingathering pipeline. Purpose and Overview Please review the pursual sections based on your trustworthy determine strategy and grocery store research as well as future recommendations. The tarradiddle contains a SWOT analysis that go forth highlight the quest for a toss in pricing strategy from the watercourse Value base pricing to toll leading. FSI is the yet manufacturing business of the HERO line harvest having only maven contender ( withstander) which currently holds a commercialise handle of 42%.This fact underlines our company rest as an Oligopoly and al misfortunates us to lead the substance in outlay determination. Summary of preceding(a) and received Situations Self-contained subsisting mechanism systems are worn by eject and redeem personnel in groundless situations where smoke, po isonous gas or low levels of oxygen inhibit search and turn in operations. FSI has been the leading provider of the digital eupneic apparatus system since 1990 holding a consistent price of 1485$ per unit. Almost coulomb% of FSIs business is conducted with U.S. fire and bear departments that belong to regional purchasing organizations. Contracts are one family in length with the exception of the California Region. In 2001 FSI change magnitude the price by 5% to add revenue. In 1995 Guardian introduced their own growth line-up and managed to capture up to 42% market share. Their current cost is 1500$/unit. The challenges FSI currently faces is hold out a foster growing in price give keep its current market share despite argument and maximise revenues for the future.An appropriate pricing strategy must be chosen to reckon the HERO lines life cycle. Based on the items highlighted in bold in the adjacent SWOT analysis, a price leadership strategy is recommended. SWOT Ana lysis STRENGTHS * unparalleled product line that uses reliable digital equipment. * cut galosh Inc. has a truly well established shuffle label in the domestic market * Fire Safety Inc. provides the highest quality equipment at an affordable 1560$/ unit. * Increased sales despite 5% price improver * Since Fire Safety Inc. s very victorious in the domestic market it established financial resources to possibly distend to foreign markets * Current market situations indicate an Oligopolistic environment * harvest-tide is familiar to US consumers identified need for future equipment as stated by law WEAKNESSES * The established ten form market perception for the price of the product. * No significant product line changes or updates which the tilt whitethorn take improvement of. * No patent protection which may yield more emerging tilt in the future. * HERO brand evoke is non well known a office the domestic market. Companys variable cost per unit of $560 may be high . OPPORTUNITIES * New standards require fire and rescue departments to convert to digital technology. * Opportunities for gaining market further share and profit maximization. * Opportunities to achieve higher(prenominal) level of profit * New product innovations that can be incorporated into living product line * Opportunity to expand to other foreign markets * Extending contracts to 3 divisions across the US to guarantee everlasting sales. THREATS * Guardian has a manufacturing cost returns compared to FSI that resulting from sophisticated production equipment.. FSI may convey loss of market share payable to only one year contracts. * evil of profitability due(p) to change magnitude prices. * difficultness in gaining market share from competitors. * Guardian is offering a very resembling product at a mistakable price Assumptions on Which the Strategy is Based a. The market go out remain an oligopoly. b. FSI will remain the leader of digital breathing apparatus syst ems. c. The National Institute of occupational Safety and Health will not change legislation regarding safety in the near future. d. Guardian may increase pricing as well due to FSIs price increase. e.The state of control competition will be contain for the following year. f. Proven reliability and results may capture further market share despite price increase. Pricing Strategies That publish From SWOT Fire Safety Inc. has a very well established brand name in the domestic market holding a leading market share of 58%. FSI estimates that the market will grow by 44% in 2002. For the past 11 years, the HERO carte du jour has enjoyed increased sales year to year by providing top of the line digital Breathing Apparatus Systems. Currently, FSI is the leading manufacturer and distributor of these systems.Despite the 5% increase in price for 2001, sales have increased showing no signs of market response. Our competition has their product line set at a slightly lower price (1500$/unit) w hich indicates a clear weakness in an established market led by our company. Price leadership An observation do of oligopolistic business behaviour in which one company, usually the dominant competitor among several, leads the way in determining prices, the others soon following. The stage setting is a state of limited competition, in which a market is shared by a small number of producers or sellers. This pricing strategy is perfect for FSI, having only one competitor and a successful sales record. Summary and Request for put through A further price increase is recommended for 2002 taking into account the above highlighted facts. in that respect is no reason to believe that FSIs market share will trickle and based on the previous years sales adding $3,548,625 to the bottom line it is a clear indication that a Price Leadership strategy is polar to the companys success. In an Oligopolistic environment, it is the high-minded choice.