Executives Zero in on Pricing

This was a timely article!  I've been studying for my first BUS 501 test covering marketing, including segmentation and pricing and marveling about the potential complexity of pricing when I took a break to review the latest headlines.  This article caught my eye.  This is an article dated tomorrow with the subtitle "CEOs Search for Sweet Spot Amid Rising Costs and Tightening Purse Strings".  The current economy is producing price-sensitive shoppers and companies are noticing.  The article discusses how Starbucks Corp. plans to raise prices of "larger and hard-to-make drinks, while maintaining or reducing prices of some of its other drinks".  Other firms are decreasing discounts or tailoring their price raises to particular markets -- for example, Pernod Ricard, maker of Absolut Vodka is raising prices in Europe, Asia and Latin America while keeping "prices flat in the U.S. because of weak consumer confidence".  The article also cites Royal Caribbean Cruises Ltd. which has a total revenue growth of 7.1% over the same quarter one year ago -- the cruise operator may adjusts hundreds of prices in a single day!

I found this article interesting because it reinforced some of the concepts we've encountered in the last few weeks including pricing strategies and determinants of strategies such as the income effect, which is certainly in play during the current recession.  Each company mentioned had a different approach to capture the market that has become increasingly sensitive to price.

Source:
WSJ.com, September 27, 2010