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Marketing Example Problems

1. What are some of the considerations on which companies have to reflect as they attempt to create a price?

2. There are several pricing strategies available to marketers -- two of these are called Market Skimming and Market Penetration. Under what circumstances would you use one or the other?

3. Before we specifically look at United Airlines, as a service provider, let's look at the challenges that marketers in the services industry face in marketing their product. What are these challenges?

4. People who work for the service provider are critical. How do they provide "tangibility" to a service, which -- in essence -- is not very tangible? How critical is this tangibility to the promotion of the service?

5. What attribute do consumers tend to see as being most important when it comes to a service... and to which service providers need to be most sensitive?

Solution Preview

1) In the market, there are many different options available to consumers - from low end products to high end designer one.

If you walk into a grocery store, you can see an entire row of water bottles. Some are marked with store brands, while others are designers ones (i.e. - No name vs. Evian). This is normal and much expected since there are different types of consumers. Some consumers want the cheapest price - and they will buy the NO name products for a utilitarian reason - to quench their thirst. However, there are other consumers that are all about the perceived quality of the product - they will be more then happy to spend 2.00 on an Evian bottle of water for a few reason. Firstly, they can trust the name (the brand name is synonymous with quality). Secondly, they like to show off that they bought the brand name - it might impress people. Finally, they might not trust the quality of a lesser product.

This is as true for water as it would be for running shoes - Wal-Mart brand Vs. Nike.

As for the concert tickets, the $500 one must be the deluxe package - perhaps a private room with food and drinks... most probably anyone can buy a "nose bleeder" ticket far away for as little as 80$.

So how you price your product will determine how people perceive your product. However, your pricing also had to be consistent with the perceived quality of your product. Competitor products also need to be considered. All of these need to be thought of when determining a price, otherwise your consumers might not be attracted to your product.

2) Market SKIMMING occurs when you are about to launch a new product, and you charge a high initial price. This is true when launching a new technology such as a cellphone or computer. People who are ...

Solution Summary

This solution assists with the example marketing problems.