The paper "Pricing and Cost Structures at Frankfurt Pump Company " is a perfect example of a marketing case study. The Frankfurt Pump Company is among the leading pump manufacturers in the world. The company was founded by a mechanical engineer called Heinz Hoffman in 1965 (Zimmerman & Blythe, 2013). It is headquartered in Germany. Mr Hoffman initially started the company with a primary aim of manufacturing speciality tools; he later improved his business after gaining enough capital to developing and manufacturing high pressure patented pumps. The company which started as a small company steadily grew and by 1970s, it had gained a reputation as the best high-pressure pump injection pump in the region.
The design of the pressure injection pump was well integrated to meet the needs of secondary gas and oil recovery with any form of steam injection. The company’ s management understood the need of effective and its impact on any organization; it placed much precedence on its marketing and within a short duration of time the company had gained a relatively higher market share in the oil market.
FPC’ s pumps were recognized as the standard oil patch pressure steam injection pumps. They were also perceived as best engineered for high steam injections. The company was growing at an unprecedented rate. However, Mr. Hoffman died in 1979 (Zimmerman & Blythe, 2013). Frederick, who was his son, took over the management of the company. The company continued in operation maintaining its high-quality production of high pressure pumps up to 1990 when it was sold to a coal company. However, due to losses, the coal company sold the company to FPC.
The company was again sold in 1999 to a Europe-based oil company (Zimmerman & Blythe, 2013). Despite the high recognition of quality production of pumps, the frequent selling off the company affected the company’ s business operations. For instance, the first purchase was made mainly to milk cash since little reinvestment was placed into the company. It is based on this background that this paper seeks to find out whether the pricing and cost structures used by the company were competitive and some of the actions that the management can take to improve its pricing and customer’ s costs.
It will also examine the actions the management should take about the FPC’ s current new product development process and product line. Furthermore, it will assess the opportunities that the FPC can consider and how its management should assess each of the opportunities. Pricing and cost structures at FPC Before looking into the pricing and cost structure used by the FPC Company, it is prudent to find out what pricing and cost structure entails. The aspect of cost and pricing involves concepts of the nature of the product or service, customer division as well as the geographical region.
A cost or pricing structure can be used as a tool for determining the prices of the organization’ s products. Cost-Based Pricing strategy enables an organization to determine areas in which cost needs to be increased, reduced or needs to be subjected to better control. The pricing and cost structures used in an organization to a larger extent will determine the organization's sales and revenue values and has a ripple effect on other organizational operations thus determines a company’ s success or failure.
Pricing is a highly demanded and vital component of the marketing mix theory. Pricing and cost structures are essential as it gives the organization’ s consumers an overall image of the standards the organization has to provide through their products. A price can be set to maximize profitability for the overall market or the entire market. Therefore, organizations must use the best pricing and cost structures that are effective and can help the organization maximize their sales and revenues. This is because the price set will determine whether the consumers will purchase or not purchase the products.
From recent market research evaluations, the competition within the market is high thus businesses must be keen on the types of pricing and cost strategies they choose, it must be one that will benefit their business.
BibliographyZimmerman, A. & Blythe, J. (2013) Comprehensive Case: The Frankfurt Pump Company GmbH (FPC) pp474-492 in Zimmerman & Blythe, Business to Business Marketing Management A Global Perspective, Second Edition. Abingdon: Routledge.