Providing Value to Customers

Read these sections to get another perspective on marketing and the marketing mix. Complete the exercises at the end of the sections.

(AACSB) Communication

Most calculators come with a book of instructions. Unfortunately, if you misplace the book, you're left to your own devices in figuring out how to use the calculator. Wouldn't it be easier if the calculator had a built-in "help" function similar to the one on your computer? You could just punch the "Help" key on your keypad and call up the relevant instructions on your display screen. You just invented a calculator with this feature, and you're ready to roll it out. First, however, you have to make some pricing decisions:

When you introduce the product, should you use skimming or penetration pricing?
Which of the following pricing methods should you use in the long term: cost-based pricing, demand-based pricing, target costing, or prestige pricing?

Prepare a report describing both your introductory and your long-term alternatives. Then explain and justify your choice of the methods that you'll use.