Key metrics to determine total market share, revenue, cumulative

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//In the following paragraphs, there will be an evaluation of the pricing strategy's impact on the market share and cumulative profitability of Sun Power Company against its industry and new competitors through simulation Run #1 and Run #2. There will also be a description of the pricing strategy's impact on the consumer net price, modular price, and unit cost of the company against the industry and new competitors.//

Pricing Strategies

There are two different pricing strategies for Run#1 and Run#2 so as to determine the best fit of pricing strategy. Run#1 will have reducing pricing strategy whereas Run#2 will have the increasing pricing strategy. The simulation results of both the runs will show the actual performance of the both the strategies, which will help to select the best pricing strategy with the given range of prices to increase the growth of the company.

1) Decision 1: For Years 2008-2009

The pricing strategy for Run#1 considers the reduced price to restrict the entry of new entrants and attract more customers, which will increase the market share. The pricing strategy for Run#2 considers increased price because the company is an established company and has its reputation before customers and increased price can be justified with increased amount of investment in the improvement process.

Inputs for Run#1

a) Pricing - Manual, b) Module Price - $0.14, c) Revenue to Process Improvement - 5%, d) Years to Advance - 2 years

Inputs for Run#2

a) Pricing - Manual, b) Module Price - $0.16, c) Revenue to Process Improvement - 5%, d) Years to Advance - 2 years

Simulation Output for Run#1 and Run#2

(See the Table)

The impact of reducing pricing strategy indicates that there is a positive impact on the market share because of increase in the number of customers and consequently, grabbing the market share to 3.65%. On the other hand, increasing pricing strategy has a negative impact and reduces the market share to 2.87%, which means reducing pricing strategy is better. The impact of reducing pricing strategy in Run#1 and increasing pricing strategy in Run#2 on revenue indicates an increasing trend, which means both the strategies are able to increase the revenue. In the case of cumulative profitability, the reducing pricing strategy has adverse impact whereas increasing pricing strategy has a positive impact that can be seen from the above-mentioned table (Eclipsing the Competition: The Solar PV Industry Simulation).

The impact of reducing pricing strategy is positive because it reduces consumer net price, modular price, and unit cost whereas the impact of increasing pricing strategy is adverse because of increased consumer net price, modular price, and unit cost, which cannot be favorable for the company regarding growth and profitability. There is no entry of new competitors in both the cases to evaluate the impact of aggressive pricing strategies of new competitors on the company's performance (Eclipsing the Competition: The Solar PV Industry Simulation).

2) Decision 2: For Years 2010-2011

On the basis of the simulation output in decision 1, there can be further evaluation of pricing strategies' impact on the performance of the company. The pricing strategy for Run #1 considers a further reduction in price to $0.13 to restrict the entry of new entrants and attract more customers. The pricing strategy for Run #2 considers further increase in price to $0.17 because the company is an established company and has its reputation, which provides the facility to make the sale at a high price.

Inputs for Run#1

a) Pricing - Manual, b) Module Price - $0.13, c) Revenue to Process Improvement - 5%, d) Years to Advance - 2 years

Inputs for Run#2

a) Pricing - Manual, b) Module Price - $0.17, c) Revenue to Process Improvement - 5%, d) Years to Advance - 2 years

Simulation Output for Run #1 and Run #2

(See the Table)

The impact of reducing pricing strategy indicates that there is a positive impact on the market share, which can be seen from the above table of simulation output. The company has achieved a market share of 4.26% whereas with the implementation of increasing pricing strategy, the company lost the market share to 2.54%, which means reducing pricing strategy is better. The impact of reducing pricing strategy in Run #1 and increasing pricing strategy in Run #2 on revenue indicates an increasing trend, but reducing pricing strategy is better than increasing pricing strategy because of higher revenue in Run #1 than Run #2. In the case of cumulative profitability, the reducing pricing strategy has adverse impact whereas increasing pricing strategy has a positive impact that can be seen from the above-mentioned table (Eclipsing the Competition: The Solar PV Industry Simulation).

The impact of reducing pricing strategy is positive regarding consumer net price, modular price, and unit cost because of reduction in these factors that will improve the market position of the company. On the other hand, the impact of increasing pricing strategy is adverse because of increased consumer net price, modular price, and unit cost, which is not favorable for the company regarding growth and profitability. There is no entry of new competitors in both the cases to evaluate the impact of aggressive pricing strategies of new competitors on the company's performance (Eclipsing the Competition: The Solar PV Industry Simulation).

3) Decision 3: For Years 2012-2013

On the basis of the simulation output in decision 2, there can be further evaluation of pricing strategies' impact on the performance of the company. The pricing strategy for Run #1 considers a further reduction in price to $0.12 to see the reaction of the market towards the reduced price. The pricing strategy for Run #2 considers further increase in price to $0.18 because of the company's reputation to retain the customers at the increased price.

Inputs for Run #1

a) Pricing - Manual, b) Module Price - $0.12, c) Revenue to Process Improvement - 5%, d) Years to Advance - 2 years

Inputs for Run#2

a) Pricing - Manual, b) Module Price - $0.18, c) Revenue to Process Improvement - 5%, d) Years to Advance - 2 ...