Problem 1: Nintendo Wii You are presented with an example of a product which we
ID: 1112524 • Letter: P
Question
Problem 1: Nintendo Wii
You are presented with an example of a product which we have researched to find the prices available. We looked at the Wii console. The table shows the range of prices.
Retailer
Price – March 2009
Price – March 2010
Amazon.com
$269.99
$239.90
Best Buy
$249.99
$199.99
GameStop
$249.99
$199.99
Target
$249.99
$199.99
Shopping.com
$269.95
$229.95
eBay
$269.99
$229.99
Describe the type of pricing strategy that seems to exist in this market and comment on the strategies that may be being adopted by the various retailers above.
What factors might have affected the decision by the retailers in the examples above in setting their price?
Problem 2: Flights to London
Another example, this time a service. We looked at a flight from New York JFK Airport to London (Heathrow Airport) flying out on Saturday March 27, and returning on Monday March 29th, non-stop. We then got a comparison, the same service but flying out one week later (April 3) again for one week. Look at the results below:
Departing March 27, from JFK, and returning March 29th (Economy Class)
Carrier (Airline)
Price (including all taxes)
American Airlines
$648
British Airways
$924
Delta
$730
KLM
$730
Virgin Atlantic
$648
Departing April 3, returning April 5 (Economy Class)
Carrier (Airline)
Price (including all taxes)
American Airlines
$800
British Airways
$852
Delta
$893
KLM
$890
Describe the likely pricing strategy for an airline offering flights from London to New York.
What explanation can you offer for the differences in the prices quoted, both within the two tables and between them?
Retailer
Price – March 2009
Price – March 2010
Amazon.com
$269.99
$239.90
Best Buy
$249.99
$199.99
GameStop
$249.99
$199.99
Target
$249.99
$199.99
Shopping.com
$269.95
$229.95
eBay
$269.99
$229.99
Explanation / Answer
A)
The pricing strategy is tht of charging higher prices to individuals who are moe eager. In other words the demand for these people are highly elastic and are thus willing to pay moe.Over time the price decreases as the people with elastic demand are left. Therefore, firm will charge lower prices.