Final Exam Guide Channels & Logistics

Will Sadler

Final Exam

Due: 12/17/12

Title: High airfares hit Florida Markets

Concept: How airlines effectively use a mixed pricing strategy compared to cost plus

Let’s first discuss how airlines use a mixed pricing strategy with demand. In a mixed pricing strategy, prices fluctuate with demand which this article clearly provides an example of. They increased the fares to Florida this holiday season knowing it will be a popular winter destination and that people will pay the price to go there. If the airlines were to have used cost plus, or delta for example, they would be leaving money on the table and profits would not be maximized.

The airliners have also utilized a mixed pricing strategy through different markets of different items, in this case airline tickets. A ticket to Chicago may only be marked up 30 percent while a ticket to Florida is marked up 40 percent. This is a key aspect of mixed pricing which allows the airlines to make up certain tickets more than others because they know people will pay more for destinations with a higher perceived value to the customer.

Now we will look at the advantages of Mixed pricing over cost plus in the airline industry. Cost plus would never be successful in the airline industry for many reasons. First off, cost plus calls for everything to be marked up the same not allowing for airlines to take advantage of raising fares for only specific parts of their market. Cost plus also doesn’t take competition into account, which is a huge factor in the airline industry. Last year there were 22 price bumps in the industry in which 9 succeeded. That wouldn’t be plausible with cost plus and is vital to the success of the airline industry.

Title: Radio Flyer rolls in to the 21st century with scooters

Concept: Explain what stage of the PLC the 3 key products discussed are In (wagons, tricycles, scooters)

Let’s start out talking about Radio Flyer’s wagon line. Radio Flyer’s wagon product is in the decline stage of...