BUS 162 Lecture Notes - Lecture 4: The Economic Journal, Ebay, Butane
13 Oct 2016
School
Department
Course
Professor
Louis restaurant
(Author’s name)
(Institutional Affiliation)
Date
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(Insert surname) 2
Price issues
Louis hair salon is a well-established salon in Malaysia. The efforts of the owner have
helped in positioning the salon at its current position. The pricing of services offered by Louis
salon should depend on various factors including cost incurred. The salon has employees who
are paid a monthly salary or wages. There are also utility bills and costs of, producing the
branded products.1
If any of these expenses is higher than expected, it will affect the price charged to a
customer and may lead to customers complaining. The salon might be overpaying its workers or
producing very expensive products which are not for the class of customers they target. It is vital
that an organization to consider incurring costs depending on the clientele they target. The cost
of the branded products is relatively high since they do not produce in bulk quantities. Most
suppliers operate on the principle of economies of scale, therefore the more you produce, the
lesser the average cost you will pay.2
The salon should consider negotiating with their suppliers for lower prices or rather they
can also market their branded products to other salons so that they increase production and also
revenue. Regarding targeting, it is vital that the salon identifies the class of customers they want.
They can either target, high income or medium income customers for now. High-income
customers will require the salon to upgrade every facility to high class. The salon should be
spacious enough, and the prices should be hiked.Problems with the TV being placed too high, the
air conditioner that has a risk of leaking and the narrow space between two salon chairs is
discouraging many customers from coming back.3
The main mistake that the salon may be doing is providing a medium class or low-class
services but charging highly, hence the reason for complaints from customers. Customers will
never understand the tiny costs you are incurring. Therefore, the salon should streamline their
internal costs and offer a fair price to public.4 The salon should conduct a benchmarking exercise
1 Pang, Gu, Fabrizio Casalin, Savvas Papagiannidis, Luc Muyldermans, and Ying Kei Tse. "Price
determinants for remanufactured electronic products: a case study on eBay UK." International
Journal of Production Research 53, no. 2 (2015): 572-589.
2 Sheu, Gloria. "Price, quality, and variety: Measuring the gains from trade in differentiated
products." American Economic Journal: Applied Economics 6, no. 4 (2014): 66-89.
3 Nartea, Theresa J., and Kimberly L. Morgan. "Selling Directly to Buyers: How to Price Your
Products." (2015),5.
4 Hassanzadeh, Rasoul Baradaran, Amin Boluori, and Karim Abri Kheljan. "The effect of
product mix and price on increasing sales of products manufactured in Butane
Company." European Online Journal of Natural and Social Sciences 2, no. 3 (s) (2014): pp-
1711.
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Document Summary
Louis hair salon is a well-established salon in malaysia. The efforts of the owner have helped in positioning the salon at its current position. The pricing of services offered by louis salon should depend on various factors including cost incurred. The salon has employees who are paid a monthly salary or wages. There are also utility bills and costs of, producing the branded products. 1. If any of these expenses is higher than expected, it will affect the price charged to a customer and may lead to customers complaining. The salon might be overpaying its workers or producing very expensive products which are not for the class of customers they target. It is vital that an organization to consider incurring costs depending on the clientele they target. The cost of the branded products is relatively high since they do not produce in bulk quantities.
