MKT 230 Week 7 - DQ 2 - 7923

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Search your local newspaper for advertisements
and examples of pricing strategies. If you do not have access to a local newspaper,
search for a newspaper online. What are two pricing strategies that you found in the
advertisements? Describe the function the price serves for each product or service.
When responding to your classmates, describe the steps the company likely followed
when planning the price strategy described in the response.



One of the advertisements I found was for employee pricing on GM vehicles. The ad is essentially the cost of the vehicle shown next to the employee discount and other incentives. At the bottom, the final cost of the vehicle is displayed as being much lower than the original price. I believe this is an example of demand-based pricing. GM, in an effort to drive sales up, has temporarily lowered its prices on brand new 2009 vehicles. However, once the economy improves and/or people begin buying new cars more often again, the prices will go back up and the incentives and discounts will end. On the other hand, I could see this as also being yield management pricing because not all customers will qualify for the incentives, since some of them are based on good credit scores. In that respect, car dealers charge different customers different prices for the same product.

 

Another advertisement I saw was for brand new championship leather jackets for the Steelers, who just won the Superbowl. The jackets are listed for ?nly?$249. I believe this is a skimming price strategy because it is a new, highly desirable product at available for a premium price. As the commotion of the recent Superbowl win dies down so will the demand for this product, which means the manufacturer only has a limited time to be able to make so much profit.



I saw an advertisement for furniture in some newspaper ad. I was thinking of buying a couch for my living room but then I realize I am never home that much so its hard to enjoy the comfy couch. The pricing was very low for all of their products and primarily the reason being that they are going out of business. The combination of the downturn in the economy and the crash in the real estate market has created a low demand for furniture in general. They used a strategy of spending an X amount and get a free something, I forgot. I guess that might be considered quantity suggestive pricing.

Another advertisement was some gold coin with president Obama. I didn't really look at it but all I remember it looked expensive, I don't know its because of gold prices climbing and/or a combination of a prestige pricing because it is a desired product.


Two products I found that used pricing strategies were the LG VU phone by LG and a new dish at Olive Garden called the four cheese stuffed mezzaluna.

The LG VU was priced at $49.99 and this was a trial price. LG is starting the price low to entice people to buy the new phone. Once people try it they are likely to spread the word getting others to purchase the phone. After so long the price of the phone will go up.

The new dish at Olive Garden is probably a penetration price. There are two versions of the dish one with shrimp costing $12.95 and the other with sausage costing $9.95. Usually new dishes are priced lower to get people to buy them as much as possible. Eventually the dish will be faded out and something else will be created to replace it.



     Clever marketers know that the goal is to sell the customer a product. Use of pricing strategies are sometimes overlooked but are an important part of the marketing mix.  Pricing strategies can have a large impact on profit, so should be given the same consideration as promotion and advertising strategies.  A higher or lower price can dramatically change both the gross margins and the sales volume.

     When considering a pricing strategy we must consider;

    * Our competitors
    * Suppliers
    * Availability of substitute products
    * Customers

I recently received a mailer from Starbucks.  Because a Starbucks latte has a higher perceived value than a basic coffee with cream, Starbucks has justified a higher price.  This pricing strategy is called Prestige Pricing.

 Arby? uses a pricing strategy called Quantity Suggestive Pricing in which customers are encouraged to purchase 5 sandwiched for $5.00.  The suggestion is effective as it encourages customers to purchase sandwiches in quantity to reap the discounted price while increasing the profit margin for Arby?.








Solution Description

Search your local newspaper for advertisements
and examples of pricing strategies. If you do not have access to a local newspaper,
search for a newspaper online. What are two pricing strategies that you found in the
advertisements? Describe the function the price serves for each product or service.
When responding to your classmates, describe the steps the company likely followed
when planning the price strategy described in the response.



One of the advertisements I found was for employee pricing on GM vehicles. The ad is essentially the cost of the vehicle shown next to the employee discount and other incentives. At the bottom, the final cost of the vehicle is displayed as being much lower than the original price. I believe this is an example of demand-based pricing. GM, in an effort to drive sales up, has temporarily lowered its prices on brand new 2009 vehicles. However, once the economy improves and/or people begin buying new cars more often again, the prices will go back up and the incentives and discounts will end. On the other hand, I could see this as also being