Strategic Management Accounting Report: Grenade Company Pricing

This report provides a strategic management accounting analysis of Grenade Company, a UK-based snack business. It begins with an introduction to strategic management accounting and then examines Grenade's market position, including its success in the UK sports nutrition market. The report explores four market-based pricing strategies: market skimming, penetration pricing, loss leader pricing, and premium pricing. Each strategy is evaluated for its suitability for Grenade, with considerations for market competition and company goals. The analysis concludes with a recommendation for Grenade to adopt a penetration pricing strategy to maximize market share and customer acquisition. The report emphasizes the importance of strategic management in achieving business growth and highlights the role of pricing strategies in achieving organizational objectives. The report references relevant academic sources to support its analysis and recommendations.

STRATEGIC MANAGEMENT
ACCOUNTING

Table of Content
• Introduction
• Market Position of Grande
• Four market based pricing strategies
• Consider each of the above strategies
• Make recommendations regarding pricing strategy
• Conclusion
• References

INTRODUCTION
Strategic management accounting operates in collaboration with
other corporate divisions to create demand for consumer products and services
(Adler, 2018). Business people use this strategic management accounting to
evaluate the costs of these operations to ensure that the organisation doesn't
really lose its cost effectiveness position. This presentation based on Grenade
Company which is UK based organization. This assessment covers several
topics such as market position of Grenade and available options regarding
suitable pricing strategy.

Market Position of Grande
Grenade is indeed a UK snack business based throughout the West
Midlands. It's also the bestselling "protein bar" in the UK. The company also
manufactures protein supplements, spread and cookies. As of June 2019, the UK
sports nutrition market was worth £ 897 million, up 19 per cent yearly. The global
business is worth £ 12.4 billion (up 8 per cent annually). To increase production,
140,000 bars were sold each day-after a 10 months period, Granada has entered
into a new distribution deal with DCS, a third-party logistics business that also
deliver good to Unilever. Barratt seems to have no plans to hold back, "I met Red
Bull last year. They've been selling for 38 years and they have been running for 9
years.

Four market based pricing strategies
• Market skimming: In this pricing strategy, the manufacturer sets a high initial
price to target purchasers with a deep desire for commodity and the means to
purchase it, and then progressively reduces prices to achieve next and eventual
layers of the market. A first mover on the marketplace, faced with little to no
rivalry, usually uses a pricing strategy.
• Penetration pricing: It is one of the most used pricing techniques where price
of a commodity is set earlier low in order to quickly penetrate a large part of
market and to open up a word of mouth (Alabdullah, 2019). The strategy is
predicated on the assumption that consumers will switch to a different brand
due to lower price.

Continue
• Loss leader pricing: This pricing strategy is a term used in marketing and
it refers to an intense pricing strategy wherein shop prices are below the cost
to stimulate sales of other profitable products. With that kind of a pricing
strategy, a business sells its product at a loss to generate customer traffic
away from its competitors.
• Premium pricing: It is a technique that requires the tactical pricing of the
product or service higher than the immediate rivals. The goal of this pricing
strategy is to set premium price on their, is to foster a perception that the
value of the product available is just as much stronger than the average.

Consider each of the above strategies
• Market skimming: This pricing strategy is not suitable for Grenade
Company because in this strategy, initially manufacturer has to set high
prices for higher profit. Grenade is offering competitive products which
already exist in the market, so they cannot use skimming pricing strategy
because it is not beneficial for them and Grenade unable to maximise their
sales.
• Penetration pricing: It is the suitable strategy for Grenade to maximise
their sales which helps in building strong customer base sales through
generating product demand. In this pricing strategy, Grenade has to set low
price for their protein bars which helps in maximising overall demand.

Continue
• Loss leader pricing: This pricing strategy is also not suitable for Grenade and
they no need to bear loss on selling their products. Grenade is leading brand of
UK as well as they offer healthy protein bars and other snacks which can be
easily sold due to high demand in the market. Grenade should adopt some other
pricing strategy to generate profitability or maximise productivity.
• Premium pricing: It is similar to the skimming pricing strategy where initially
company set high price for their products. But, this is not suitable for Grenade
Company because their rivalry also offer similar kind of products. In case,
company offer luxury as well as unique products then they can charge high price
for them

Recommendations
Grenade Company should adopt penetration pricing strategy which is
beneficial for the organization to capture high market share through selling
products on low price and attract the customers (Cescon, Costantini and
Grassetti, 2019). Penetration pricing allows a business to have its service or
product easily embraced and embraced by consumers. Competitors are usually
taken by surprise by this pricing strategy and are given less time to respond. The
organisation is able to reap the benefits of the ability to move as many clients as
possible. The pricing strategy creates high selling volume that enable the
business to realise economies of scale and reduce its marginal cost. Customers
who are willing to find a deal in a good or service are likely to come back to the
company in the future.

CONCLUSION
From the above discussion it has been observed that strategic
management is essential to get growth in their business operations. There is
several pricing strategy which can be used as per the purpose of organization.
Some organization want to maximise their profit in minimum time and some
wants to maximise customer base through increasing their demand in the
market by selling their products at lower price.

References
Adler, R. W., 2018. Strategic performance management: Accounting
for organizational control. Taylor & Francis.
Alabdullah, T. T. Y., 2019. Management Accounting and Service
Companies' Performance: Research in Emerging Economies. Australasian
Accounting, Business and Finance Journal. 13(4). pp.100-118.
Cescon, F., Costantini, A. and Grassetti, L., 2019. Strategic choices
and strategic management accounting in large manufacturing firms. Journal of
Management and Governance. 23(3). pp.605-636.

Thank You