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Pricing and Distribution in Marketing Decisions

Contrast the pricing and distribution strategies of Westin Hotels vs Motel 6.

(1) What is the pricing strategy used by each company? What are the reasons for and/or against a price reduction for this particular product or service?

(2) How is this product distributed, i.e., how do customers and clients find it? How does each product's distribution fit (or fail to fit) its target market, as defined in Module 1?

(3) Why would each product be (or not be) a good candidate for online distribution?

Please use the attached PDFs and below links as references:
http://knowledge.wharton.upenn.edu/article.cfm?articleid=2768
http://www.cnbc.com/id/41950692

Ditch the Discounts.
Mohammed, Rafi
Harvard Business Review; Jan/Feb2011, Vol. 89 Issue 1/2, p23-25

The Race to the Bottom, By Adam McCauley

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Introduction:

Pricing and distribution are probably the most important components in the marketing decisions of any product since they are the essence upon which a company is able to generate revenue. The pricing and distribution strategies of a company are mainly determined by the market that the company is targeting. Though Westin Hotels and Motel 6 both provide accommodation services to their clients they target very different markets and apply very different pricing and distribution strategies in their marketing decisions. The pricing and distribution strategies are the strength upon which any company generates revenue and is able to compete effectively in the ever changing business environment. This paper contrasts the pricing and distribution strategies of Westin Hotels and Motel 6 in their marketing decisions.

Pricing Strategies for Westin Hotels and Motel 6:

Westin hotels and Resorts are a brand of Starwood Hotels and Resorts and it is an upscale and luxurious full service hotels, residences and resorts. This company therefore uses prestige pricing to promote, enhance and maintain the image of its products, and to limit it only to the high end and affluent clientele both young and old. The company uses a price-quality-value pricing strategy for its products where the customers pay more for better high quality luxurious products. This pricing strategy is mainly based on price skimming strategy where the company uses different pricing phases at different times and for different rooms in order to generate profits. In this strategy the company targets a market segment that is willing to pay premium price for the brand. The pricing strategy is a reflection on the luxury and quality of its rooms as well as the brand Westin. This pricing strategy is in line with the positioning of the brand as an upscale and luxurious full service hotels, residences and resorts satisfaction to the clients (Florissen, Maurer, Schmidt, & Vahlenkamp, 2001).

On the other hand Motel 6 which is a chain of low budget motels uses a penetration pricing strategy where the objective of the pricing is to maximize sales volume by means of lower prices. The company applies this strategy since the demand for its rooms are highly elastic where the customers are price sensitive and any increases in the price of the product would result to reduced sales since customers would simply switch ...

Solution Summary

Pricing and distribution in market decisions are examined. Why each product is a good candidate for online distributions is determined.

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