Written Assignment #6
1. As an advisor to the vice president for marketing for a firm that markets computer
software, you must regularly develop pricing strategies for new software products.
Your latest product is a software package that automatically translates any foreign
language e-mail message to the user’s preferred language. You are trying to
decide on the pricing for this new product. Should you use a skimming price, a
penetration price, or something in between? Write a memo for the VP marketing
in which you summarize the pros and cons for each alternative and give your
recommendation and its rationale.
2. Many very successful retailers use a loss leader pricing strategy in which they
advertise an item at a price below their cost and sell the item at that price to get
customers into their store. They feel that these customers will continue to shop
with their company and that they will make a profit in the long run. Do you
consider this an unethical practice? Who benefits and who is hurt by such
practices? Do you think the practice should be made illegal as some states have
done?