1. Module 5 - Case
THE MARKETING MIX: PRICING STRATEGIES
Questions/Tasks
What pricing and marketing (target market, product, place, and
promotion) strategies should the airlines follow?
Defend your positions on why you selected the strategies you
have chosen.
The Situation
Pricing strategy has to be considered in terms of target market,
product, promotion, and distribution strategies. e.g. Less
competition for seats on a route allows higher prices (fares) per
distance traveled to be charged for that route. Or differences in
seating preferences, aisle versus window versus middle, first
versus business versus cattle, fore versus aft. The question was
written so that the students SHOULD focus on SHOULD.
SHOULD the airlines follow these pricing practices? If so,
why? higher gross margins?
In addition, there is now the question of total service pricing vs
paying for only those services used, pricing is based on use of
agent versus internet, use of overhead, number and size of
suitcases. SHOULD the airlines follow those pricing practices?
If so, why? If not, why not
Pricing strategy has to be considered in terms of target market,
product, promotion, and distribution strategies. e.g. Less
competition for seats on routes allows higher prices (fares) per
distance traveled to be charged for those routes. Or differences
in seating preferences, aisle versus window versus middle, first
versus business versus cattle, fore versus aft allows variation in
pricing. And, if a plane's seats are being sold faster or lower
than expected, prices are raised or lowered.
Note that question is written so that you SHOULD focus on
SHOULD. SHOULD the airlines follow these pricing practices?
If so, why? If not, why not?
Airline know that, among other factors, flights are chosen by
flyers based on price. So, to make sure that their fares are the

2. lowest when customers search for fares in Expedia or
Travelocity; airlines load additional onboard or check-in
charges such as baggage handling fees to the published fares.
This practice leads into the issue of total service pricing vs
making customers pay for only those services used, such as
pricing based on use of agent versus internet, use of overhead,
and number and weight of suitcases handled by the airlines.
SHOULD the airlines follow those pricing practices? If so,
why? If not, why not? In effect, should airlines publish all-
inclusive fares thereby asking passengers who don't want or
need the amenities to subsidize the fares of those that do OR
should the airlines charge for each service that is rendered
thereby causing (as described in the article) overhead bins being
stuffed with luggage and service workers losing their cool?
Assignment Expectations
In answering the question make reasonable assumptions,
(clearly you won't have the same information available to you
as the VP of Marketing at an Airline, e.g. about costs, but make
some assumptions and follow through in your analysis).
You should also bear in mind that a fundamental goal, as with
all the cases you build in MKT490, is to demonstrate your
learning.
In preparing your CASE5, ensure that you demonstrate your
learning of the marketing concepts and frameworks for analysis
outlined in the modular learning objectives by using and
referencing the background and case material.
Explain the pricing strategies that firms use.
Explain what factors are involved in the development of a
pricing strategy.
Explain the relationship between costs and prices.
Explain the relationship between a firm's pricing strategy and
its product, distribution, and promotion strategies.
In particular, in answering the question, ensure that you
demonstrate your understanding of pricing, the factors affecting
success of pricing, as well as your learning from previous
modules.

3. In particular, review what you learned about consumer behavior
(Background Readings for Module 1) and bolster your argument
in terms of when consumers make their decisions based on
price, as opposed to brands and the locations of retailers.
Note that this assignment does NOT require you to prepare a
detailed essay. Instead use section headings for each of the
topics you address in your paper followed by a discussion of
that topic.
Case Readings
Barron, James (2010). Flight attendant's tale resonates, and
evolves.
The New York Times
(August 10).
Available March 8, 2013 at
http://www.nytimes.com/2010/08/11/nyregion/11attendant.html
Negroni, Christine (2010). Less baggage, big savings to
airlines.
The New York Times
(April 6).
Available March 8, 2013 at
http://www.nytimes.com/2010/04/07/business/07bags.html
Mackey, Robert (2010). Anxiety over lost luggage fuels air
wars.
The New York Times
News Blog. (August 11).
Available March 8, 2013 at
http://thelede.blogs.nytimes.com/2010/08/11/anxiety-over-lost-
luggage-fuels-air-wars/