THE WALL STREET JOURNAL.
INPRACTICE
Customersmakejudgmentf.about
pricingbasedonperceivedvalue,
notproductioncosts.Fororganiza-
tions, however, pricingdetermines
theprimarysourceofrevenuefor
thebusiness.Variousmarketseg-
mentsandtheirrespectiveprice
sensitivitiesmustbeconsidered
whenmarketersdecideona pricing
strategy.
Increasingly,marketersare
responsibleforpricing.Marketers
mustunderstandstrategiesprevi-
ouslyreservedforeconomlslsand
financialanalysts.Questionsof
pricepoints, pricelining,andprice
bundlingnowfalltomarketers.
Whatdomarketersneedto
knowtopriceproductstomaxi-
mizeprofits andcapturemarket
share?Break-evenanalyses,target
ratesofre turn,andmark-upsarea
fewofthe processesmarketers
mustmaster.
Tolearnmoreaboutprofits
andpricing, clickontheInteractive
Journal'slinktoMoney&Invest-
ingontheFrontSection.
Inthissectionyou'llfindinfor-
mationaboutinterest rates,eco-
nomicconditions,andventure
capital.Becauseinterestrates
affectconsumerspending,itis
importanttounderstandeconomic
indicatorsandtheirimpact
TheBusinessFocussectionof
Marketplaceisa goodrGsourcefor
articlesthatdiscussvariousbusi-
nessmarketingissues,including
pricing.
Naming yourownpr:ceisthe
strategyforPriceline.com.Cus-
tomersnametheirOWLpricefor
planetickets,hotelrooms,and
rentalcars. Initially,thecompary
relishedgreatsuccess.Powever,ii
hasrececltlysufferedfinancia l
losses,dueinparttothe"Name
YourOwnPrice" strategy.Visitthe
sitenowatwww.priceline.com.
Facilitating exchangesbetween
customersisa successful business
strategyforeBay.Callingitse lf"the
worid'sonlinemarketplace,"eBay
hascreateda tradingmediumfor
anyone interestedinbuyingorsell-
ingitemsonline.Items rangefrom
one-of-a-kindcollectiblestoevery-
dayitems suchasmusicalinstru-
ments andsportinggoods.Check
outtheWebsitenowat
http://www.ebay.com.DELIVERABLE
Theairlineindustrycompetes
heavily onprice.Selecttwo airlines
andresearch faresforone round
triptic'(etoneachairline, anydes-
tination.Visit several Websitesthat
sellairlineticketsa ndco mpare
fares.Comparethesepricesto
those offeredon theairlines'Web
sites.Checkyourlocalnewspaper
forfareprices,too.Writea one-
pageov~rviewofyourfindings.DISCUSSIONQUESTIONS
1.Howdoorganizationsdecide
whethertopricetomeet,price
above, orpricebelowcompeti-
lion?H ow doorganizations
measure the successorfailure
oftheirchosen strategy?- Are yo u price sensitiveto any
products?Do youengagein
conparative shopping,search-
ing forthe"bes,deal"?
3.HowhastheInternetaffected
pricingstrategies?Howdo
Internet compa niescompete
\"ithtraditional"brick and
mortar" companiesinpricing?
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