Mindmap

Transportation: costing & pricing

Memo Gtz Spanisch

Inhalt der Mindmap

Market Considerations
- Structure Models
  - Pure competition
  - Oligopoly
    - Competition between a few large sellers of relatively products.
  - Monopolistic Competition
    - Many small sellers with some differentiation of products.
- Contestable Markets
  - It substitutes potential competition for the active participation of many sellers.
  - 1. No barriers to entry.
  - 2. Economies of scale could not be present.
  - 3. Consumers willing & able to switch quickly among carriers.
Cost-of-service Pricing
- Marginal Cost
- Average cost
Value of Serving Pricing
- Pricing according to the value of the product.
- Third-degree price discrimination
  - Seller must separate buyers into groups according to their different elasticities of demand
  - Seller must prevent the transfer of sales between the submarkets
  - Seller must possess some degree of monopoly power.
- Differential Pricing
  - Done based on several methods of segregating the buyers into distinct groups.
  - Key Success
    - Determine the appropriate costs and to stimate demand elasticity in the various markets.
Rate Making in Practice
- General Rates
  - Class Rate
    - Provides a rate for any commodity between any two points
    - From uniform distance and product systems.
    - Simplification Steps
      - 1. Consolidated the 1,000´s of shipping points by dividing the nation into geographic squares
        2. Deals w/the 1,000´s of different items that might be shipped between any two base points.
        3. Groups together products w/similar transportation characteristics so that one rating can be applied to the whole group
    - Product characteristics that impact the carrier´s costs.
      - Handling
      - Liability
      - Storability
      - Product density
  - Exception Rates
    - Carriers in particular regions can depart from the product scale system for any one of many reasons
      - Modification to the national classification instituted by an individual carrier.
  - Commodity Rates
    - For specific origin-destination shipping patterns of specific commodities.
Special Rates
- Character of Shipment Rates
  - LTL. Less than Truckload
  - Multiple car
  - Incentive
  - Unit-train
  - Per-car, per-truckload
  - Any-quantity
  - Density
- Area, Location, Rute rates
  - Local
  - Joint
  - Proportional
  - Differential
  - Per-mile
  - Terminal to terminal
  - Blanket or groups
- Time/Service Rates
  - Contract rates
  - Deferred Delivery
- Others
  - Corporate volume rates
  - Discounts
  - Loading allowances
  - Aggregate Tender rates
  - FAK rates
  - Released Value rates
  - Empty-haul rates
  - 2 way-3way rates
  - Spot market rates
  - Menu pricing
Pricing in transportation Management
- Factors
  - Customers (market)
  - Government
  - Other channel members
  - Competition
- Decisions
  - 1. Setting prices on a new service
  - 2. Modify prices over time.
    - Market & operating changes.
  - 3. Decisions will make responding to price changes.
    - Price leader
- Pricing Objective
  - Reflect company objectives & how they will compete.
  - Survival- based.
    - Increasing cash flow through the use of low prices.
  - Unit volume
    - Utilize a carrier´s existing capacity to the fullest.
  - Profit Maximization
    - Measures such as return on investment
      - Skimming Price
        High price--> attrack market focused on quality, status.
  - Penetration price
  - Market share
    - When revenues are stagnant or declining
  - Social Responsibility
- Demand
  - Price slasticity
  - Direct attitude survey
  - Market test
It is detemrined primarily by considering a carrier´s cost.
Implies a value that is detemirned based on prevailing market forces.
- Dinamic economic enviroment