Big Drive Auto Forecast Analsis

Big Drive Auto Forecast Analysis

Big Drive Auto (BDA) is a multi-state dealership. In addition to car sales, BDA provides other services, which include the sale of motor oil, coolant, and tires. Team A will provide recommendations for BDA to make business decisions based on potential changes that could take place in the current economy. Team A examined BDA’s 10 year historical data, which shows that between the years of 1998 and 1999 BDA experienced an increase in vehicle sales per unit, which indicates that the demand curve moved more to the right. Service revenue also increased; however, the sale of motor oil, coolant, and tires experienced a slight decrease. Because of a weakening economy the sale of vehicles per unit and the sale of motor oil, coolant, and tires have not decreased as is shown in the data analyzed over the 10-year period from 1998 through 2007. The service and parts area of the business has received a significant increase in revenue. To remain profitable management must develop a pricing strategy, find ways to differentiate the product and services sold by BDA. Management must also find ways to hinder other businesses from capturing a significant part of the market share (University of Phoenix, n.d.).

Pricing Strategies

BDA is aware that the price must be feasible for consumers to purchase in an effort to remain in business and remain profitable. Some components that the management team of BDA can use to establish a pricing system are environmental factors, monitoring the cost, increasing short-term profits, increasing the profit margin, and focusing on the demand of the consumers (University of Phoenix, 2009).

Pricing recommendations for BDA are to create a price for consumers at the lowest point based on the supply and demand for each product. BDA should calculate the fixed and variable cost that will be associated with the products and service in an effort to remain economically stable. Remember, the gross margin, which is the price...