Pro Audio Case Study

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PRO-AUDIO SALES AGENT PROGRAM CASE STUDY |

PROCUREMENT 5830 - PRICING |

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Mike Lee |

7/5/2012 |

PRO-AUDIO SALES AGENT PROGRAM

1. Should Pro-Audio abandon the program now, after only 18 months?

No. Pro-Audio is being proactive in trying to implement new policies to end the competing price cutting given by different offices. Rumors of finding ways around the fixed pricing need to be investigated and confirmed before acting to implement major changes. However, some of its new policies may need to be modified rather than abandoned entirely. Although purchasing directly from the manufacturers would alleviate the discounting problem as in the past, the purchasing options for customers are limited to only purchasing with up-front cash which creates new sales challenges. Local retail agents would need more administrative autonomy or flexibility to allow for financing and trade-ins to generate more sales but still allow the manufacturers to sell at the $12,000 price. Implementing a policy to allow local retailers to finance equipment purchases would alleviate the problem of the sales as well as the heavy discounting problem since it would allow consumers to pay over time.

2. What would be the implications of such a change?

Implementing the above suggested changes would allow the prices to still be controlled at the $12,000 price but allow for customers to pay over time. Additionally, the $12,000 price would only be affected if the policy would allow for trade-ins of older equipment.

3. What should Steve Marsh recommend at the next Executive Committee meeting?

The first thing that Steve Marsh should recommend at the next executive meeting is to push for an aggressive value communication campaign on its products (Nagle & Hogan, 2006). The Pro-Audio value to the customer should be a superior brand image that is highly sought after by the major recording studios and professional musicians. This value communicated to consumers...