Pricing Strategy for ITO Company

PROBLEM:

You need to discuss pricing with senior management. Prepare talking points on how ITO should price its services compared to the many domestic and international companies in the same market niche and why. Be sure to include pricing strategies (such as Going-rate or competition-based pricing, Perceived-value pricing, Value pricing or "every day low pricing" (EDLP), Markup or cost-plus pricing, Target-return pricing, Group pricing, and Auction pricing).

Also include strategies for:
? short duration, small staff projects
? long duration, large staff projects
? projects that fall in between these two categories

Also include your suggestions about how to handle competition, especially off-shore (i.e. India) or near-shore (i.e. Canada) competition offering very low pricing. Discuss how often ITO Company's pricing structure should be reviewed and why.

Include work citations/references.

FYI ONLY: BACKGROUND ON SCENARIO COMPANY

You have just been hired as the new Marketing Manager at ITO Company. ITO(or Information Technology Outsourcing)is a five year old, US$10 million company, with 100 employees. The company outsources its full-time information technology professionals who may work at clients' sites, from regional offices or from the company's Chicago headquarters. You are excited about this new job since this is your first management position, having come from a large marketing department in an architectural/engineering/construction professional services company. While you performed a wide variety of marketing functions in your old position, you never set marketing strategy nor were you in a position of management there. You feel challenged to meet ITO's corporate goals. While you are comfortable marketing services, you recognize the difficulty in marketing in a sluggish economy, considering how heavy the competition is, particularly from Canada and India, which offers well-educated and well-trained information technology professionals at prices well below ITO's costs.