Marketing Essay - How Australian Service Companies Set Their Prices
The marketing mix of the local environment is going to make a big impact on the marketing mix of the local company. Culture varies wildly in Australia as it is such a big country. Environmental factors may include physical surroundings, the local populace, and the influence of regional businesses, national businesses and international businesses.
The service industry on a micro-marketing scale is forced to create standardized packages for the local populace in order to keep costs low. They will then increase their customer base by offering more customized service packages that are tailored for new markets. Prices often have to be customized depending on the market and the demographic within the market, as it is only the elite customer that is able to purchase without concerns about price.
A service company will often set its prices based upon cumulative costs. For example, if a company wants to trade outside of its local area, it must take travel costs and administrative costs into consideration. That is why many smaller businesses will offer better prices to their customers in the local area. They are then able to fight off competition from others areas who have to charge more. Since some towns in Australia are fairly remote, it means that a single service company in the town may own a monopoly on the service they provide.
The influence of international businesses is a factor in an Australian service companies pricing decisions. The international business environment is often unstable, which means that smaller firms sometimes have the edge over their bigger business and international rivals. An upset in just one country is going to upset the company in Australia. In many cases, simply undercutting the competition by a few dollars is enough to create a sustainable net profit. And, if international problems do occur with their local internationally founded competition, the local Australian company may gain custom through simply being an alternative service company.