Essentials of Marketing - Case Study Example

Contents Introduction 2 Role of Pricing 2 Easy jet Fares 4 British Airways Fares 6 Comparison of Fares between Easy Jet and British Airways 8 Reference 9 Introduction Marketing is termed as the process of planning and executing the idea, price, promotion and the channels of distribution of goods and services and also of ideas which tends to satisfy the organization and the individual (McDaniel & Gates, 1998, p. 3). The main objective of marketing mix is to establish simultaneous action in order to influence the customers and their purchasing decision. The marketing mix constitutes of four components, the product, price, place and promotion (Belohlavek, 2008, p.11). This project would talk about one component of marketing mix which is pricing strategies. The project is projected to address the pricing strategies that are followed by Easy Jet Airline and compare the price with the British Airways. Role of Pricing The fundamental rule of supply and demand states that when there is excess of supply over demand, the price tends to go down and when there is excess of demand over supply of products, the price tends to rise. Thus it can be suggested that prices moves upwards or falls in order to eliminate the risk of excess demand and to bring the supply and demand in the same equilibrium. Price is one of the most important components of marketing mix but also its importance does vary from product to products. Prices are based on certain calculation of cost providing the result in unit cost which tends to remain constant or reduces. The nominal price is determined by the prudence which is often experienced by a customer in the process of acquisition of their personal needs and human wants. It is actually the value that the customer expects from the price paid. The type is market price at which the products are sold off. Market prices rise and fall when the offers exceed the demand or stays below the demand. The price of the product thus depends on two forces the supply and demand (Papantoniou, 1992, p.167). Price is termed as an ingredient which a customer has to pay in order to obtain a product. It is most often regarded as the most flexible components out of the four marketing mix elements. It is one of the quickest elements which can change. Marketers have the ability to raise or even lower the prices more frequently than they change the other marketing variables. Price is regarded as an important competitive weapon and is essential for the organization because price gets multiplied by the number of units sold which equals to total revenue of the firm (Lamb & Hair &McDaniel, 2008, p. 47). In order to survive in the highly competitive market place, companies are going for the strategy of obtaining pricing objectives which are attainable, specific and measurable. Pricing objectives are divided into three categories which include profit oriented, sales and status quo. Pricing objectives of a firm often reflects the reality of the market. Pricing objectives are not always used to increase the profit of the firm. Sometimes a firm maintains the price to retain the position which is relative to the competition. This form of pricing objective is termed as status quo. When it comes to the basic law of supply and demand it does influences the pricing strategy. Although the inverse relationship between the price and demand is understood and well known, it is often seen on the perspective of supply side which means that the relationship between price and demand is usually seen from the marketer’s perspective. Another important issue with regards to supply and demand is the expectation of the customers with respect to price. The customers often tend to have expectation when they purchase a product but in some case the customer expectation about price can be the driving force used in the pricing strategy. According to the situation demand, a marketer sets prices which are in accordance with what the market would pay irrespective of the cost, competition and other factors which affect the pricing strategy (Ferrell & Hartline, 2010, p.236). Easy jet Fares Easy Jet is one of the leading airlines in Europe which operates on over 580 routes and across 30 countries and with a fleet of over 200 aircrafts. Easy Jet holds the number one position in Milan, Geneva and Gatwick and holds the second position in Paris and carries about 300 million people (Easy Jet Plc, n.d). The prices of a one week return ticket from London (Luton) to Madrid for each of the following departure times: Leaving tomorrow: Assuming the date of tomorrow to be 1 March 2012, the rate on 1st March 2012 is £68.99 Leaving in one week time: Assuming the date on return after a week time being 7 March 2012, the rate on that particular date is £36.99 Leaving in 1 month time: Assuming one month being 1 April 2012, the price on that date is £82.99 Leaving in three months time: Assuming the three month will come to 1 June 2012 stood at £82.99. But on the same date departure during the noon priced a little higher than the departure in the morning. Flight which was to depart on 13:00 was priced at £92.99 (Easy Jet, n.d). The following is the rate along with the date of Easy Jet Airlines Figure 1: Rates of Easy Jet The above figure which represents the rates of esay jet as per the dates given i.e afte a week, a month and after three months. The figure clearly depicts that the rates of the airline on the 1 of March 2012 stood at a higher price than the price which is projected after a week i.e on 7 of March 2012. It has been founded that priceses are uaulaly high when they are booked at the last moment or particularly one day before the departre date. But the rate projected after a month which is on 1 april 2012 is also high and stood at £82.99. This may be due to the weekends where there are usually more rush so the price tends to rise up as the theory of demand and supply states that when the demand is high prises rise up and vise versa. The rate of tickets recahed at a peak on the 1 June 2012 exactly after three months where the rates is projected to be £92.99. The rates of airlines keeps on fluctuating and Easy Jet being an low cost carrier , thus the level of demand does affect the price and cheaper flights are most often are avilable during a less busy periods such as on mid week flights the rates are often cheaper than the weekends and other time of the weeks. The above result of Easy Jet airways rate are mostly of weekends of the start of the week thus resulting in a higher prices than the other period of the week. British Airways Fares The prices of a one week return ticket from London (Heathrow) to Madrid for British Airways for each of the following departure times: Leaving tomorrow: Assuming that the British Airways would fall on 1 March 2012 the rate on the respective date is £782 Leaving in one week time: Assuming the leaving date after a week would be 7 March 2012, the rate of British Airways on 7 March 2012 is about £782 Leaving in one month time: Assuming the date after a month which is the 1 April 2012, the rate of British Airways is £787 Leaving in three months time: Assuming the date after three months would be 1June 2012, the rate on the predicted date after 3 months is projected at £787 (British Airways, n.d). Table showing the rate of British Airways Date Rate 1/3/2012 £782 7/3/2012 £782 1/4/2012 £787 1/6/2012 £787 Figure 2: Rates of British Airways The table and figure shows a clear icture of the rate of British Airways on the given time which were departure on the following day, after week, after a month and after three months time. The rate of British Airways is almost same for all the time period, only a small amount of difference has been noticed between the departure date on march april and June. The rate remins the same for all the periods. British Aiirways is not a low cost carrier and thus its rates remains stable even after three months time from the present date which is clearly represented in figure 2. Comparison of Fares between Easy Jet and British Airways There is a huge difference in the rates between the two airways, Easy Jet and British Airways. The rates of Easy Jet are relatively low as compared to British Airways and this is due to the fact that the demand for the low cost carrier is always high as compared to the British Airways. When the demands are high, the prices are also high. In case of Easy Jet the fares increases as and when the departure date gets nearer but the fare of British Airways farers have always remained high and also after three months the rate was almost the same as in the present date. As compared to British Airways, the rates of Easy Jet are comparatively low and this is because of the fact that the Easy Jet is a low cost carrier and the demand is always high. Reference 1. Belohlavek, P., 2008. Unicist Marketing Mix. Blue Eagle Group. 2. British Airways, No Date, Plan your Journey. [Online] Available at: http://www.britishairways.com/travel/fx/public/en_gb. [Accessed 29 February 2012]. 3. Easy Jet Plc, No Date, About Us. [Online]. Available at: http://corporate.easyjet.com/about-easyjet.aspx. [Accessed 29 February 2012]. 4. Esay Jet, No Date, Chose your flight. [Online]. Available at: http://www.easyjet.com/EN/Booking.mvc#. [Accessed 29 February 2012]. 5. Ferrell, O. C. & Hartline, M., 2010. Marketing Strategy. United States of America: Cengage Learning. 6. Lamb, C. W., Hair, J. F. and McDaniel, K., 2008. Essentials of Marketing. United States of America: Cengage Learning. 7. McDaniel, C. D. and Gates, R. H., 1998. Marketing research essentials. Cincinnati, Ohio: Taylor & Francis. 8. Papantoniou, P. C., 1992. Marketing: The Complete Awakening. Malaysia: Pass Publications. Read More