During the Christmas season, you will see lots of shops hang out such slogans including “SALE”, “20% off”, “Save up to 50%”. Do you feel excited when seeing this? The answer is “Of course”. Especially for most of women, they always think shops send them the “purchase” signal, which means they can buy more what they want. You may argue that most of people are crazy in shopping during that period. Then, do you remember how many times you choose the lower price goods when purchasing necessities? Without any doubt, the answer is such situation always happens again and again.
In the marketing field, the price is the most direct approach for company to get feedbacks from consumers. Those feedbacks can help firm to find own position and further combine other 3Ps to expand company’s advantages. Leigh stated the firm would employ several price strategies including premium pricing, penetration pricing, economy pricing, price skimming and psychological pricing to widen sales and earnings. Besides, the firm can use price change to fight with other competitors, and moreover it is thought as the easiest and fastest way. When changing price, these factors including PLC, discounts and coupons need be considered. However, such strategy is useful only in short-term, which implies it will damage the company’s long-term development. In addition, too frequent change of price would lead to consumers lose their loyalty and confidence for the company.
Take Qantas as example, it is the famous Australian brand in the global aviation. Meanwhile, it occupies more than 50% market share in Australia. According to Qantas Website, this firm has always been committed to provide safety flight and enjoyable experience for consumers. Besides, this firm always pays more attention on the customers’ demand and own brand positioning. Thus, it sets up these price strategies including “Cost plus Margin”, “Demand-Supply based” and “Competition-based”.
Regarding the cost, fluctuation of fuel price would influence the cost change of airline, of course, including the Qantas. This essay pointed out the fuel occupies the 40% of the total cost in the Qantas (David, 2012). Therefore, the increase in fuel price would certainly raise the price of flight ticket. In addition, Qantas choose target groups are frequently travelling from one place to another. Those people require comfortable space and gain professional and high quality service. Consequently, when deciding price, the price level should fit service quality. At the same time, it also conveys such information to consumers, just like the video said “You Are the Reason We Fly”.
For Qantas, the severe question is ticket price would be attacked by other competitors such as Virgin Australia. In the view of this article, the Virgin Australia and the Qantas had already started a price war, which were involved low-cost consumers in the Australian market (Max 2014). During this war, Qantas had to revalue future plans about capacity and development. In order to keep the majority of market share, this firm had to protect the strategy and even not adding any capacities. For those low cost flight lines, this company uses penetration pricing as the strategy. This means high quality product sets a low price. Most of consumers know that Qantas put its brand to position the high quality service. Thus, this company would provide good services no matter high or low price. Certainly, such strategy can not only please consumers, but also increase in brand imagine. Actually, some articles expounded the result of this war did not let both parties pleased. The reason is that no one won in the long-term development.
David, B. 2012, The Upside to Qantas and Jetstar’s Price Hikes, retrieved 29th of April, <http://theconversation.com/the-upside-to-qantas-and-jetstars-price-hikes-5175>
Leigh, R. n.d., Different Types of Pricing Strategy, retrieved 29th of April, <http://smallbusiness.chron.com/different-types-pricing-strategy-4688.html>
Max, M. 2014, Virgin Battle Testing Qanta’s Domestic Strategy, retrieved 29th of April, <http://www.smh.com.au/business/aviation/virgin-battle-testing-qantas-domestic-strategy-20140521-38nh9.html>
Qantas Group, n.d., retrieved 29th of April, April, <https://www.qantas.com/travel/airlines/company/global/en>