What are some ways to respond to overdemand?

What will be an ideal response?

When a company cannot supply all its customers, it can raise its prices, ration supplies, or both. It can increase price in the following ways, each of which has a different impact on buyers.
• Delayed quotation pricing. The company does not set a final price until the product is finished or delivered. This pricing is prevalent in industries with long production lead times, such as industrial construction and heavy equipment.
• Escalator clauses. The company requires the customer to pay today's price plus all or part of any inflation increase that takes place before delivery. Escalator clauses base price increases on some specified price index. They are found in contracts for major industrial projects, such as aircraft construction and bridge building.
• Unbundling. The company maintains its price but removes or prices separately one or more elements that were formerly part of the offer, such as delivery or installation. Car companies sometimes add higher-end audio entertainment systems or GPS navigation systems to their vehicles as separately priced extras.
• Reduction of discounts. The company instructs its sales force not to offer its normal cash and quantity discounts.

Business

You might also like to view...

Each item in a knapsack problem will be a stage of the dynamic programming problem

Indicate whether the statement is true or false

Business

When possible, investors and analysts prefer to use book value to market value for estimating the WACC

Indicate whether the statement is true or false.

Business