Key microeconomic Essay Example | Topics and Well Written Essays - 500 words

Key microeconomic - Essay Example CPI should not pose a threat to firms such as Proctor and Gamble. The firm can be position in a segment of the market where it would not have to compete directly with the market leaders. The best way to achieve that goal is by implementing a differentiation strategy. A variable that can help the company achieve a differentiation strategy is the quality of its products. A second important economic variable that CPI has to consider is pricing. The pricing strategy is very important because price determines the ability of a company to achieve superior profits. Products that are underpriced may sell well but its overall effect in the profitability of a company is not optimum. CPI has to study the market prices of all the products it sells. In a pricing study the firm should analyze the market price of each product in the US, internationally and online. Selling the products at a premium price can help the firm differentiate from low cost producers. The price structure of the company shoul d be sufficient to pay off for all variable and fixed cost while at the same time leaving a hefty surplus of profits. The profit margin of the enterprise should be equal or better than the industry average.