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Pricing Strategy

The Marketing Mix: Pricing Strategies

Questions/Tasks

What pricing and marketing (target market, product, place, and promotion) strategies should the airlines follow? Defend your positions on why you selected the strategies you have chosen.

The Situation

Airline trips are chosen by flyers based on price. So, to make sure that their fares are the lowest when customers search for fares in Expedia or Travelocity; airlines are loading in additional onboard or check-in charges such as baggage handling fees.

Should airlines publish all-inclusive fares thereby asking passengers who don't want or need the amenities to subsidize the fares of those that do OR should the airlines charge for each service that is rendered thereby causing (as described in the article) overhead bins being stuffed with luggage and service workers losing their cool?

Expectations

In answering the question make reasonable assumptions, (clearly you won't have the same information available to you as P&G's VP of Marketing, e.g. about costs, but make some assumptions and follow through in your analysis).

In preparing your response, ensure that you demonstrate your learning of the marketing concepts and frameworks for analysis outlined in the modular learning objectives by using and referencing the background and case material.

1. Explain the pricing strategies that firms use.

2. Explain what factors are involved in the development of a pricing strategy.

3. Explain the relationship between costs and prices.

4. Explain the relationship between a firm's pricing strategy and its product, distribution, and promotion strategies

In particular, in answering the question, ensure that you demonstrate your understanding of pricing, the factors affecting success of pricing, as well as your learning from previous modules.

In particular, review what you learned about consumer behavior (Background Readings for Module 1) and bolster your argument in terms of when consumers make their decisions based on price, as opposed to brands and the locations of retailers.

Pay special attention to P&G's pricing methods as you review P&G's pricing strategy as an intrinsic component of the marketing strategy for its products. In terms of that marketing strategy, you should comment on P&G's target market(s) and how its products are differentiated from competitive products, whether it should be distributed more or less intensely than competitive products, and whether it should be promoted more or less intensely than competitive products.

Note that this assignment does NOT require you to prepare a detailed essay. Instead use section headings for each of the topics you address in your paper followed by a discussion of that topic.

Case-related articles in the popular press

Mackey, Robert (2010 August 11). Anxiety Over Lost Luggage Fuels Air Wars. The New York Times News Blog. Available on 2010 November 2 at
http://thelede.blogs.nytimes.com/2010/08/11/anxiety-over-lost-luggage-fuels-air-wars/

Barron, James (2010, August 10). Flight Attendant's Tale Resonates, and Evolves. The New York Times. New York, NY. Available on 2010 November 2 at
http://www.nytimes.com/2010/08/11/nyregion/11attendant.html

Negroni, Christine (2010, April 6). Less Baggage, Big Savings to Airlines. The New York Times, New York, NY. Available on 2010 November 3 at
http://www.nytimes.com/2010/04/07/business/07bags.html

rev 2010 November 03

Solution Preview

In accordance to BrainMass rules this is not a completion of assignment but only background help.
The Situation

Airline trips are chosen by flyers based on price. So, to make sure that their fares are the lowest when customers search for fares in Expedia or Travelocity; airlines are loading in additional onboard or check-in charges such as baggage handling fees.

Should airlines publish all-inclusive fares thereby asking passengers who don't want or need the amenities to subsidize the fares of those that do OR should the airlines charge for each service that is rendered thereby causing (as described in the article) overhead bins being stuffed with luggage and service workers losing their cool?
1. Explain the pricing strategies that firms use.
There are two pricing strategies that airlines use. The first is that passengers are charged for a package of services even though he passengers do not need those services. The second is that airlines charge separate fees for each service served. One of the most common examples is that of charging every passenger the cost of snacks or meals and serving these to every passenger. On the other hand, several airlines do not serve their passengers food/snacks during their flight. There are some airlines that serve food to passengers only after charging them individually for their service.
The example that is explain in the article is that baggage check in increases the cost of air ticket and so low cost airlines can keep the cost of ticket down by charging separately for each individual check in luggage. The passengers however, have the alternative of rushing in at full speed and ...

Solution Summary

This response presents a brilliant discussion on Pricing Strategy

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