Question

Pick a service provider (AT&T) and explain how it changes its pricing to encourage patronage during low demand periods. What are the pros and cons of this strategy? How does this pricing strategy influence the bottom line of the company? Be specific and give an example.

Answer 1

AT&T is the world's largest telecommunication company and it is the second largest provider of mobile telephone service and largest provider of fixed telephone services in united states. when it comes to telecommunication sector, all the major companies like T-mobile, AT&T, Verizon etc always focus on more people preferences. virtually everyone in the world can't live without the phone if they want to survive in this competitive world they need to have the access to everything and make them more superior then rest of the world. as a result, in order to generate the growth, the major company always resort to taking the customer from one other.

this sector doesn't have particularly loyalty approach people always switch companies over the best offer they are producing, so the changing in pricing and servicing is the major strength of every company. now AT&T provide the 2-year contract for the customer to enjoy the services, they also provide different plans according to new phones which you buy.but nowadays they are selling someone month plans too which may be changed according to customer preferences. as this changing in pricing strategy helps them to retain their customer and attract new customers during the low demand periods. this is the major pros of these type of strategy. but when it comes to the cons factor, as this company changes their strategy frequently, the market gets more turbulent as compare to another sector hence people can't build some sort of trust over any company as the stability factor has vanished.

now as, this whole senario effect the bottom line of the company take an example as AT&T and verzion are dividend achievers, the change in pricing effect both the company like verzion customer enjoy unlinited talk, text, data foo $80 per month were as for $60 per month, as the dividend stock is good in AT&T , it will manage to bear the losses but for verizon it effect more, as to remain in the comptition many comapny bear the losses, so its influence the bottn line the most as it effect to direct the customers and shareholders too.