Pricing Strategies

Chapter 19 talks about pricing concepts and strategies. There are many different options for pricing strategies including:
Penetration Pricing- Start off with a product with a low price, and as customer base increases you can jack up the price.
Optional Pricing- A company would sell optional products with a main product to help with sales.
Premium Pricing- A price is set very high in relation to aa luxury product.
Competition Pricing- Setting the price of a product to that of your competitors.
Bundle Pricing- A company bundles together multiple products to sell together at a discounted rate.
Skimming Pricing- A product starts off at a high price and goes down over time to reach a larger market.
Psychological Pricing- The seller decides the price based on what they think a consumer will pay for the product.

Some real life examples of these definitions include:
Penetration pricing- Dish Newtwork will offer a satellite dish to its customer at a low rate, and then once the market increaed for there product, they would increase the price for the cable or satellite channels.
Competitive Pricing- In most retail stores such as Target and WalMart you will see adds about having the lowest price. Some even have little print that says "Compare to Targets price at $X.XX".
Skimming Pricing- When XBOX and Playstation come out with the Xbox 720 and Playstation 4, the prices are going to be very high. But as time passes the product will start to fall in price. For example when the PS3 came out it cost around $500, and today you can purchase a PS3 for around $250.

When thinking about all of the pricing strategies, one jumped out at me. Psychological pricing seems like a companies best way of making a profit. Companies price things different to get the consumer to have a different reaction. A company would market something for $10 but price it a $9.99. For some reason this makes consumers want the product more because it is cheaper, when really it is not. Why do you think psychological pricing is so successful in todays market?

Response to Kaley DeBoer's question about commercials

I think the most rediculous commercials are the state farm commercials with the jingle followed by a wish and it coming true. These commercials are advertising an insurance company and the commercials insinuate that when in a bad spot you can teleport with your insurance agent completely goes beyond the point of trying to convince a consumer to buy your insurance. Another commercial that came to my mind with this question was the toyata commercials that were able to push a car up the mountain or do snowboard tricks, and even help a plane land.

Why do you think a company would make a commercial that completely ignores the product its trying to advertise?

Supply Chain Management

In Chapter 14 the key processes of supply chain management are pinpointed. There are eight critical business processes that are identified which supply chain managers must focus on to obtain success: Customer relationship management, customer service management, demand management, order fulfillment, manufacturing flow management, supplier relationship management, product development and commercialization, and returns management. Supply chain management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption.

Which of the eight processes are most important to the supply chain management?

Response to Katie O'Hurley's AT&T question

I think that Budweiser did that a while back with the "Wazzup" commercials. I think that they were a huge hit with consumers and people who watched TV thought it was funny. I dont know if there were any numbers revealed that can back that but I believe its pretty similar to what AT&T is doing but also to a completely different target market. I personally loved the Budweiser commercials and think the new AT&T ones are hilarious.

Why do you think commercials like these are so effective, especially when they dont have anything to do with the product?

Marketing Channels -Airways

Marketing Channels connect producers with consumers for a product. The main point of marketing channels is to make the product available for consumer needs.Marketing Channels is involved with one of the 4 P's of the marketing mix and is a useful tool for management. Marketing channels affect promotion as well as advertising. For an Airline they can have many different channels to get the plane tickets to the customers inclduing: travel agents, calling the airport/airline, airline offices, online websites(ex. kayak), or at an airport. In the airline industry these marketing channels are extremely important. You see a lot of commercials advertising airline tickets, not necessarily specific companies but different websites such as kayak or expedia. A main advantage that an airline company would have is that the marketing channel doesnt take nearly as long to get from the producer to the consumer because the company usually directly sells the tickets to individual consumers.

Marketing Channels are a very important part of every business.Which one of the above listed marketing channels is the best for an airline company? Why?

Response to Drews Phone Question

Do you think you would be able to live without technology now that we depend so much on using it? How often do you use your smart phone? Daily? Hourly? Every minute?

I feel that in todays world people rely very heavily not only on their technology but on their cell phones. People are on them nonstop all day. In my case I always have my phone on me and check it about every hour, although there are times when I can be on my phone for hours. I could live without it but it would be hard to communicate with friends/family without it. Since obtaining a smart phone Ive only had to go without it a couple of times with the longest being two weeks because I was out of the country. I would say that it was pretty easy without it but only because I knew that it did not have service, therefore it was useless. If I were to be without it for two weeks while at home I think it would be a lot different and weird in some ways. With how much technology is being put into phones its not hard to see why people fall in love with them so quickly.

With the iPhone dominating the smart phone world, and Tmobile recently adding its own version, do you see a monopoly of the product coming?

Advertisings effect on the market

Seeing as St. Patricks day just passed, I figured I would talk about the importance of advertising for specific companies. Companies such as Anheuser Busch or MillerCoors advertise especially hard for instances such as New years, the Super Bowl, St Patricks Day, and The 4th of July. The reason is these four dates are known for partying and the companies see this as a prime time to market there product and hit a larger audience by commercials, flyers, posters, billboards, and even free merchandise. (Ex: Bud light beads for St pattys day) Advertising has become a major competition in recent years as the markets have been fighting for the consumers. Todays day and age is all about the social networks and companies have taken advantage of this with ads on virtually every website that you go onto while on the internet.

People tend to have their own tastes and generally stick with that. Do you believe advertising a product in the beverage industry influences a consumer enough to purchase a product?