Marketing Essentials

Unit 8: Pricing

WebQuests

Is the Price Right?

A business that charges more than its customers are willing to pay is not likely to stay in business for long. The amount customers are willing to pay often depends on the amount being charged by other producers of similar goods or services. Businesses that operate in a competitive market must pay close attention to prices charged by other firms. The growth of Internet retailing has made this even more important today. If you charge $12 for three golf balls that can be purchased online for $5.99, you are not likely to sell many golf balls. In the long run, you can only succeed in charging more for your products if they are truly worth more because they have higher quality.

1. Investigate Begin the activity by finding five ads for auto insurance companies advertising low rates. Search the Internet using the key words automobile insurance, low rates. Most insurance firms that advertise on the Internet offer to give you a price or quotation for insurance protection if you supply them with information about where you live, your car, driving record, age, and whether you recently have been convicted of a moving violation or had an accident. This information helps the firm assess the risk it would take by insuring you and how much it should charge you for insurance protection.
2. Summarize Write a summary of how each advertisement is designed to encourage customers to choose the advertised firm's policy. What do the ads include besides claims that they offer low prices? Do they mention important factors you should consider such as quality of service, speed of paying claims, or what will happen to your rates if you have an accident?
3. Assess Explain why you think each advertisement you identified will or will not cause consumers to purchase insurance from the firm. How have the firms tried to differentiate (make them seem different) their policies from those of other firms? Would you automatically buy the least expensive insurance offered? Explain the logic behind your assessment.