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Kerin-Hartley-Rudelius: Marketing: The Core, Second Edition IV. Satisfying Marketing Opportunities 12. Pricing Products and Services The McGraw-Hill Companies, 2007 Kerin-Hartley-Rudelius: Marketing: The Core, Second Edition IV. Satisfying Marketing Opportunities 12. Pricing Products and Services The McGraw-Hill Companies, 2007 C HAPTER L E A R N I N G O B J E C T I V E S After reading this chapter you should be able to: 1 Identify the elements that make up a price. 2 Describe how to establish the initial approximate price level using demand-oriented, cost-oriented, profit- oriented, and competition-oriented approaches. 3 Explain what a demand curve is and the role of revenues in pricing decisions. 4 Explain the role of costs in pricing decisions. 5 Describe how various combinations of price, fixed cost, and unit variable cost affect a firms break-even point. 6 Recognize the objectives a firm has in setting prices and the constraints that restrict the range of prices a firm can charge. 7 Describe the steps taken in setting a final price. WHERE DOT-COMS STILL THRIVE: HELPING YOU GET A $100-A-NIGHT HOTEL ROOM OVERLOOKING NEW YORKS CENTRAL PARK When I travel, I always go through Internet sites, Utah State student Catherine C. Woolley tells Business- Week magazine. 1 She used this strategy with Priceline. com to reserve a $100-a-night hotel room overlooking Central Park, a glitzy area in New York City. Despite the effects of the September 11, 2001, attacks had on the travel industry, online bookings are expected to rise to $75 billion in 2005, according to Internet travel re- search firm PhoCusWright. These online websites book airline tickets, hotel rooms, rental cars, and special travel and cruise packages for leisure and business travelers. In terms of market share, the top four on- line travel websites are Orbitz, Travelocity, Expedia, and Priceline, Catherine Woolleys hotel reservation supplier. Why Travel Dot-Coms Havent Tanked There are a bunch of businesses that dont make sense at all on the Internet, says Mitchell J. Rubin, a money manager who has a lot of his fund invested in Internet travel companies. Travel is the quintessential one that does, he continues. 2 Travel companies have beaten the dot-com odds by provid- ing two key benefits to customers: 1. Saving time . User friendliness makes getting Inter- net travel reservations easy, often saving much time and misunderstanding. 2. Saving money. Customers can achieve substantial price savings using the travel dot-coms instead of using conventional booking services, such as travel agents. 261 P RICING P RODUCTS AND S ERVICES 12 Kerin-Hartley-Rudelius: Marketing: The Core, Second Edition IV. Satisfying Marketing Opportunities 12. Pricing Products and Services The McGraw-Hill Companies, 2007 Travel Dot-Com Prices: A WinWin for Buyers and Sellers But what are the benefits for airlines and hotels? The easy answer: The extra money United Air- lines or Marriott Hotels receives when Orbitz or Expedia books their services more... View Full Document

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