Pricing Strategy and the Net SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Pricing Strategy and the Net
Among marketing mix variables, price alone directly affects a firm's revenue. The advent of a new medium for buyer-seller interaction, the Internet, is changing the issue of price for both customers and suppliers in an unprecedented way. On the one hand, there are Internet dynamics that flatten the customer value pyramid (defined by the value of the customer to the firm) because of technology that facilitates customer search, customer control over transactions, the provision of means by which the customer can make rather than take the price, a return to one-on-one negotiation, and commoditization of markets. Countervailing dynamics of the Internet enable the firm in some instances to differentiate pricing all the time, to create customer switching barriers, to "de-menu" pricing, to differentiate on other dimensions of the purchase decision, and to reduce transactions costs. A conceptual model is proposed for identifying Internet-based pricing dynamics and market forms according to the relative strengths of buyer and seller. These dynamics suggest that pricing decisions can be as creative as those made about the development of new products and services or advertising campaigns. Indeed, pricing may be the last frontier for marketing creativity. In the hands of the wise, the Internet might be the digital wagon that carries pricing pioneers to the edge of the digital frontier.
Authors :: Leyland Pitt, Pierre R. Berthon, Richard T. Watson, Michael Ewing
Swot Analysis of "Pricing Strategy and the Net" written by Leyland Pitt, Pierre R. Berthon, Richard T. Watson, Michael Ewing includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Pricing Dynamics facing as an external strategic factors. Some of the topics covered in Pricing Strategy and the Net case study are - Strategic Management Strategies, IT, Marketing, Pricing and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Pricing Strategy and the Net casestudy better are - – challanges to central banks by blockchain based private currencies, wage bills are increasing, cloud computing is disrupting traditional business models, geopolitical disruptions, increasing transportation and logistics costs, increasing commodity prices, technology disruption,
customer relationship management is fast transforming because of increasing concerns over data privacy, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Pricing Strategy and the Net
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Pricing Strategy and the Net case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Pricing Dynamics, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Pricing Dynamics operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Pricing Strategy and the Net can be done for the following purposes –
1. Strategic planning using facts provided in Pricing Strategy and the Net case study
2. Improving business portfolio management of Pricing Dynamics
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Pricing Dynamics
Strengths Pricing Strategy and the Net | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Pricing Dynamics in Pricing Strategy and the Net Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Pricing Dynamics are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Learning organization
- Pricing Dynamics is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Pricing Dynamics is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Pricing Strategy and the Net Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Pricing Dynamics is present in almost all the verticals within the industry. This has provided firm in Pricing Strategy and the Net case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Ability to lead change in Sales & Marketing field
– Pricing Dynamics is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Pricing Dynamics in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Pricing Dynamics is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Leyland Pitt, Pierre R. Berthon, Richard T. Watson, Michael Ewing can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
High brand equity
– Pricing Dynamics has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Pricing Dynamics to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Operational resilience
– The operational resilience strategy in the Pricing Strategy and the Net Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Ability to recruit top talent
– Pricing Dynamics is one of the leading recruiters in the industry. Managers in the Pricing Strategy and the Net are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Effective Research and Development (R&D)
– Pricing Dynamics has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Pricing Strategy and the Net - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Training and development
– Pricing Dynamics has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Pricing Strategy and the Net Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Organizational Resilience of Pricing Dynamics
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Pricing Dynamics does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Low bargaining power of suppliers
– Suppliers of Pricing Dynamics in the sector have low bargaining power. Pricing Strategy and the Net has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Pricing Dynamics to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses Pricing Strategy and the Net | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Pricing Strategy and the Net are -
No frontier risks strategy
– After analyzing the HBR case study Pricing Strategy and the Net, it seems that company is thinking about the frontier risks that can impact Sales & Marketing strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Increasing silos among functional specialists
– The organizational structure of Pricing Dynamics is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Pricing Dynamics needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Pricing Dynamics to focus more on services rather than just following the product oriented approach.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Pricing Strategy and the Net, is just above the industry average. Pricing Dynamics needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Pricing Strategy and the Net, it seems that the employees of Pricing Dynamics don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Interest costs
– Compare to the competition, Pricing Dynamics has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
High bargaining power of channel partners
– Because of the regulatory requirements, Leyland Pitt, Pierre R. Berthon, Richard T. Watson, Michael Ewing suggests that, Pricing Dynamics is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Pricing Dynamics supply chain. Even after few cautionary changes mentioned in the HBR case study - Pricing Strategy and the Net, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Pricing Dynamics vulnerable to further global disruptions in South East Asia.
Need for greater diversity
– Pricing Dynamics has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Lack of clear differentiation of Pricing Dynamics products
– To increase the profitability and margins on the products, Pricing Dynamics needs to provide more differentiated products than what it is currently offering in the marketplace.
Workers concerns about automation
– As automation is fast increasing in the segment, Pricing Dynamics needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Slow to strategic competitive environment developments
– As Pricing Strategy and the Net HBR case study mentions - Pricing Dynamics takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Opportunities Pricing Strategy and the Net | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Pricing Strategy and the Net are -
Better consumer reach
– The expansion of the 5G network will help Pricing Dynamics to increase its market reach. Pricing Dynamics will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Pricing Dynamics in the consumer business. Now Pricing Dynamics can target international markets with far fewer capital restrictions requirements than the existing system.
Manufacturing automation
– Pricing Dynamics can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Building a culture of innovation
– managers at Pricing Dynamics can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Sales & Marketing segment.
Leveraging digital technologies
– Pricing Dynamics can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Pricing Dynamics can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Pricing Dynamics in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Pricing Dynamics to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Pricing Dynamics to hire the very best people irrespective of their geographical location.
Creating value in data economy
– The success of analytics program of Pricing Dynamics has opened avenues for new revenue streams for the organization in the industry. This can help Pricing Dynamics to build a more holistic ecosystem as suggested in the Pricing Strategy and the Net case study. Pricing Dynamics can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– Pricing Dynamics has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Pricing Strategy and the Net - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Pricing Dynamics to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Pricing Dynamics can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Pricing Strategy and the Net, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Pricing Dynamics to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Pricing Dynamics can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats Pricing Strategy and the Net External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Pricing Strategy and the Net are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Pricing Strategy and the Net, Pricing Dynamics may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Pricing Dynamics can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Pricing Strategy and the Net .
Increasing wage structure of Pricing Dynamics
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Pricing Dynamics.
Stagnating economy with rate increase
– Pricing Dynamics can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Shortening product life cycle
– it is one of the major threat that Pricing Dynamics is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Pricing Dynamics will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Pricing Dynamics can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Regulatory challenges
– Pricing Dynamics needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Sales & Marketing industry regulations.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Pricing Dynamics business can come under increasing regulations regarding data privacy, data security, etc.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Pricing Dynamics.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Consumer confidence and its impact on Pricing Dynamics demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Environmental challenges
– Pricing Dynamics needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Pricing Dynamics can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Weighted SWOT Analysis of Pricing Strategy and the Net Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Pricing Strategy and the Net needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Pricing Strategy and the Net is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Pricing Strategy and the Net is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Pricing Strategy and the Net is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Pricing Dynamics needs to make to build a sustainable competitive advantage.
