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 Chapter 10A)Michael O’Leary, CEO of Ryanair, has taken the term low-cost pricing to another level. Ryanair’s success and millions of dollars of revenue, derives from their revolutionary pricing strategy. Ryanair’s pricing model stems from O’Leary’s vision of having passengers fly for free. Their pricing strategy, the foundation which this company is built upon, is a cost-based strategy that offers less value at unbeatable low prices. They keep costs to a bare minimum, which allows for them to offer extremely low prices relative to other airlines and low price competitors like EasyJet and Southwest.By finding any way possible to reduce expenses, Ryanair is capable of offering extremely low prices but nonetheless attain astonishing annual profits. To marketers, price is defined as the “sum of all the values that customers give up to gain the benefits of having or using a product or service” (Kotler, 2005,p.317). However price for Ryanair has a different meaning. Price, in the eyes of Ryanair, is simply a transportation fee which covers the fuel and landing expenses incurred by Ryanair. It is not a numerical measure of value given to the “Ryanair experience”. Instead, it is a monetary amount which represents the worth of simply transportation. B) Following the Great Recession, many companies adopted good value pricing strategies in order stay profitable. A weakened middle class, meant disposable income was low among the masses. This forced companies to provide good quality products and services at a reasonable price. Many successful and established firms expanded their brand to include a less expensive alternatives to the existing goods and services they sold. Ryanair took this concept to an extreme and was able to create a unique less-for-less business model. Southwest Airlines and EasyJet are two of their largest low-price low-value competitors, however, O’Leary goes to the extreme in order to cut costs. Ryanair has set itself apart from all other airlines by limiting expenses and only keeping what is absolutely essential on the plane. He even has gone as far as suggesting Ryanair should only keep one pilot, in order to reduce fuel (added weight) and salary expenses. This idea is one of his more radical ones, however, he has implemented many policies and strategies that were at one time unthinkable in the airline industry. Michael O’Leary and Ryanair have eliminated free food and drink services, provide only one bathroom, use only one plane type (Boeing 747), land at the cheapest airports, do not provide flight attendants with uniforms, and have the lightest seats (Kotler, 2005,p.316). Ryanair even charges to print boarding passes and for the use of debit cards! Ryanair is successful because customers know and have willingly accepted that traveling with Ryanair is cheap yet far from luxurious. Millions of passengers have embraced this fact and find Ryanair’s low prices to outweigh their lack of value. C)O’Leary believes travel is pleasant and enriching, but flying shouldn’t be pleasant, it should be easy,smooth, cheap, and safe. This concept, which is the foundation and reason for Ryanair’s success, is contradictory to what most airlines believe. Because Ryanair offers no value other than transportation, with no luxury, amenities, or inclusive services, their value lies within their low price. We need to think of Ryanair more as a flying bus, in the sense that it is a simple means of transportation which gets passengers safely from point A to point B. Customers seek out Ryanair’s services because they don't want to spend ridiculous amounts of money on plane tickets. A consumers desire to save money has been harnessed by Michael O’Leary. This allows for the value to be shifted from the flight experience to solely the benefit of a cheaper ticket.Chapter 111) When looking at the pricing strategies of Verizon Wireless and AT&T it is obvious that they are both keeping a close eye on each other. Every move one carrier makes is contrasted by a another by the competitor. Today, mobile carriers are in a battle to attain customer loyalty and acquire new customers from their competitors. While prices for making calls may be going up and the amount of calls are going down, mobile carriers are focusing more on data usage and smartphone fees. Verizon, in response to AT&T and T-Mobile’s moves recently altered their pricing strategy as well. They have increased their data plan capacity while reducing their monthly prices. Verizon’s 500MB to 2GB plans have increased in data limit while cutting price (Rogowsky, 2014). Not only have they upgraded their plans, but they have also decreased their smartphone fees and implemented the Edge package for those users who want the freedom to frequently change their phone type without incurring ridiculous charges. These new strategies have been put forth by Verizon to increase customer satisfaction and increase their customer base as well.2) With increased competition among mobile carriers, customer acquisition and customer retention is a huge focus for these multimillion dollar firms. Mobile carriers will go to great lengths to keep customers, as acquiring a customer is far more expensive than retaining one. In order to keep customers carriers spend great amounts of money on training call center employees to deal with at risk customers. More preventative means of retaining customers include bundling features and perks in all in one mobile plans. Carriers also provide rewards and discounts for loyal customers. Additionally, marketing departments focus a lot of their efforts on promoting the newest and latest smartphone in order to satisfy the younger generations who want the latest and most advanced technology. Lastly, mobile carriers have access to endless information and data about their customers. This is an important tool for carriers, which allows for them to pinpoint consumer preferences and tailor marketing strategies to certain customers (Fiorletta,2012).Chapter 121) With competition between TV providers and internet streaming services rising, channel conflicts have the potential to be a big problem for these companies. More specifically, they will be dealing with horizontal conflict. This occurs along the same level of the channel. Comcast may find issues with its Xfinity level, as that department may find itself more valuable to the company and therefore demand more marketing personnel and a larger budget. Similarly, the internet service sector of Comcast may have different views from the TV sector, and potentially cause issues within the company.2) If expert’s predictions are correct, and cable and satellite television do become less and less popular because of the Internet, a clear channel of distribution trend will be evident. This displays a distribution strategy that is becoming more and more direct. Produces are bypassing wholesalers and retailers in order to reduce cost and increase efficiency. Internet services are a great example of this. Although, Comcast’s data limits are questionable they should be allowed to do as they wish. Customers are under contracts and are subject to Comcast’s decisions. However, I would advise against implementing these policies because they are not only unethical, but are also incentive for customers to break their contracts and switch to an Internet based television and streaming provider.3) If Comcast and Time Warner Cable were to merge many repercussions would ensue. Comcast and Time Warner Cable are respectively the number one and two cable and internet providers in the world. A merger would essentially create a monopoly in this market. Internet based television providers would be crushed, as the two merged companies would have the financial backing to create a similar movie and TV streaming product at a low enough cost for Netflix and Hulu to go belly up. However, they would have enough power to do the contrary and increase prices instead. This would cause customers to be stuck with unreasonably expensive contracts, as there would be no other comparable internet and TV provider available. Those who could not afford these services would be left without internet. While this may seem like a novelty, we must realize that the internet is our biggest source of information and tool for free education. Therefore, we would be stripping low income families of their right to educate their children. This would result in an ever greater gap between America’s socio-economic classes. Lastly, this potential merger would allow for these two “super firms” to broadcast select movies, TV shows, etc. which they find suitable. Considering television and the internet have great influence on people, allowing for one company to control the vast majority of these services would be very dangerous. ReferencesFiorletta, A. (2012, April 25). Keys To Maximizing Customer Retention And Loyalty. Retail TouchPoints. Retrieved July 7, 2014, from , P., Armstrong, G., & Cunningham, M. H. (2005). Principles of Marketing. Toronto: Pearson Prentice Hall.Rogowsky, M. (2014, February 13). Mighty Verizon Joins The Mobile Price War And, Again, You Might Save. Forbes. Retrieved July 5, 2014, from ................
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