Based on the following homepages, identify and describe the ways in which Boeing and one of its primary competitors - Airbus Industrie - are responding to the changing economic and competitive environments in the airline industry. Give examples to illustrate your answer. In light of these approaches, which pricing strategies would you expect each company to use? Why?

Boeing http://www.boeing.com

Airbus Industrie http://www.airbus.com

a) The Italian automaker Lamborghini operates in a market environment characterized by nonprice competition. Define nonprice competition and explain why it applies here.

Lamborghini http://www.lamborghini.com

b) Though Mercedes-Benz and Lexus automobiles are aimed at a similar target market, price competition is much more of a factor for these companies than Lamborghini. Define price competition and explain why this is the case. Considering their respective product mixes, why would you expect price competition to become even more of a factor in the future for Mercedes-Benz and Lexus?

Mercedes-Benz http://www.usa.mercedes-benz.com

Lexus http://www.lexususa.com

If you are new to the Internet, then it may surprise you to learn that Netscape Communicator (including the Navigator browser) was not always available free of charge to the general public. Though Netscape has never charged students or educational institutions for its browser package, the retail price for Communicator was about $50 until early 1998. It was then that pressure from Microsoft, with its feature-packed and free Internet Explorer software, finally forced Netscape to make Communicator available at no cost to anyone who wanted it.

Using the following Websites and other Internet resources (i.e., search engines, news services, etc.) for reference and research, answer the questions below.

Microsoft http://www.microsoft.com

Netscape http://www.netscape.com

a) How would you characterize the Microsoft pricing strategy that forced Netscape to make such a radical change? What can Microsoft (and now Netscape) possibly hope to achieve by giving away this product for which there is such heavy demand? Doesn't this run contrary to basic economic theory? That is, shouldn't companies be able to charge higher prices for hot items such as top-rated Web browsers? Explain your answer.

b) Can any of the pricing strategies discussed in the main text (see pp. 317-331) be used to explain Microsoft's tactics? If so, what are they and how do they shed light on this situation? If not, can you think of any other high-demand products that are distributed in this manner? What does this distribution scenario reflect about the limitations of price as a competitive variable?

As this exercise book went to press, only two major U.S. airlines offered ticket pricing via the Web - Southwestern Airlines and Alaska Airlines. For the first part of this exercise, you should perform a price comparison for identical round-trip flights on both airlines. (When choosing a route for comparison, keep in mind that these companies primarily serve the western U.S.)

Southwestern Airlines http://www.iflyswa.com

Alaska Airlines http://www.alaska-air.com

a) List all of the different fare options offered by each airline and indicate the dollar amounts for each. Which pricing strategies do these fare structures represent? Explain your answer. Which airline offered the best deals?

b) How would you describe the positioning strategies for each of these airlines? How do you think competition from larger airlines like United and American drives pricing strategy for smaller operations like Southwestern and Alaska? How would you expect pricing strategies to differ (if at all) between the larger and smaller airlines?

Identify and describe the discounts offered on the following homepages. Give examples of each.

National Counties Building Society http://www.ncbs.co.uk/mortgage/loyalty.htm

Bridge Publications http://www.bridgepub.com/tradterm.htm

Let Us! Copy http://www.let-us.com/prices.html