Cutting Price Is a Must Step to Survive

Cutting price is a must step to survive

I agree with your nieceЎЇs suggestion that PCLI should make changes to its current strategy by cutting price to better position the firm to stay competitive in facing up to a stiff price competition in the market.

Customers are highly price driven in laser vision corrections market Since most insurance plans donЎЇt cover laser eye surgery, the patients are very sensitive to the price. Unlike heart attack or appendicitis surgeries, laser eye surgery is not a kind of urgent surgery and it can be deferred. So the patients have enough time to shop around to compare different laser eye surgery clinics based on price and quality before they have the surgery performed. They treat it as commodity rather than a medical surgery. Although price is not a deciding factor, the patients would choose a lower price surgeon if they can receive roughly the same quality care. ThatЎЇs why every year more and more American patients travel to Canada to have the surgery done. They were lured by the cheaper surgery fees and more experienced surgeons in Canada. If PCLI still keeps its original price, it will lose more and more customers to its Canadian competitors. In response to the intense price competition, PCLI has to begin to use low cost strategy to survive in this market. Since Canadian clinics have their own inherent cost advantage, PCLI canЎЇt cut its price as low as its Canadian counterparts which would not even cover the variable cost for the surgery for American based clinics. PCLI can charge about $300 to $400 per eye more than its Canadian competitors. When a customer considers traveling to Canada to have the surgery performed, he has to take into account other related cost such as lodging and travel expense. Considering the associated cost for traveling to Canada and the convenience for having the procedure done in America, the customers would think $1350 to $1600 per eye(to lower $400 based on original price) is a reasonable and affordable price. Except the cost, most patients are also concerned about the quality. PCLIЎЇs core competency lies in its high quality care which can provide the best value for the customer. If the more customers would choose PCLI for its affordable price and high quality service, its business would be running better and better by word of mouth among customers.

Cost can be driven down by high surgery