Required informationSkip to questionXbox: Playing the Pricing Game When Microsoft, an industry leader, introduced Xbox into the market, it did so at an initial loss. This case looks at why Microsoft chose to do this and its long-term marketing strategy.  The key to developing a marketing strategy is maintaining the right marketing mix that satisfies the target market and creates long-term relationships with customers. To develop meaningful customer relationships, marketers have to develop and manage the dimensions of the marketing mix to give their firm an advantage over competitors. Successful companies offer at least one dimension of value that surpasses all competitors in the marketplace in meeting customer expectations. However, this does not mean that a company can ignore the other dimensions of the marketing mix; it must maintain acceptable and, if possible, distinguishable differences in the other dimensions as well. Read the case below and answer the questions that follow. Because price has a tremendous effect on the success of a company, choosing the right pricing strategy is critical. Interestingly, Microsoft, the company that makes the Xbox 360, set a retail price for the device that is less than what it cost to make it. According to an iSuppli survey, the parts used to make the Xbox 360 cost the company $470 prior to assembly; however, each Xbox retails for $399 – a $71 loss. When additional items such as power supply, cables, and controllers are included, Microsoft's loss for each Xbox 360 increases to $126. In 2005, the Microsoft home entertainment division lost $391 million on sales of $3.3 billion. So why is Microsoft producing a product on which it loses money? For one thing, the cost of each game for the Xbox 360 has increased by $10 over the previous version of the console. Also, in order to use online multiplayer game functions, customers must pay $70 a year for an Xbox Live subscription, which frequent offers to buy Microsoft games and game add-ons. The company also develops new accessories, such as the Kinect, a device that allows users to interact with the Xbox 360 without a controller. In addition, Microsoft hopes that people will buy Xboxes and use them as part of their home entertainment systems. The Xbox 360 connects to televisions and allows customers to play music and movies. With new developments in the gaming industry, content for Xbox Live, and new accessories, it's up to consumers to continue to buy associated products and create that profit that Microsoft is hoping for. With over 50 million units sold so far, the Xbox 360 appears to be a profitable item. Although marketing strategy requires a good marketing mix, which element of the mix is the Microsoft case focused on?Multiple Choiceproductpriceplacepromotion

Strategically, marketing is all about: Selling products to consumers as much as possible Pricing products at the highest possible level Matching new company capabilities and new consumer needs Convincing others

Required informationSkip to questionBlair Family Sporting Goods - Keeping the Business Alive This activity is important because changes in the market frequently make it necessary for a business to alter its marketing mix. A marketing mix represents the four marketing activities – product, price, promotion, and distribution – that the firm can control to achieve specific goals within a dynamic marketing environment. To be successful, both small and large businesses need at least one component of their marketing mix to have a strategic advantage in comparison to competitors. The goal of this exercise is to demonstrate your understanding of the Marketing Mix by applying marketing components to a small business dilemma. Read the case and answer the questions that follow. The Blair Family Sporting Goods business had been a small town mainstay for over three decades. The Blair Family had provided equipment to the town’s athletes, especially focusing on equipment for the anchor sports for the town’s schools, including football, basketball, baseball, and cheerleading. What once was a booming business, Blair Family Sporting Goods had experienced a gradual decline in profits over the past decade. Several factors had likely led to the decline. Major retailers had moved to the nearby city (about an hour away) and were able to offer products at a lower price. Second, the business had continued to carry equipment for only the anchor sports (football, basketball, baseball and cheerleading), even though the local schools had diversified to include rugby, swimming, soccer, volleyball, and other sports. Third, when time allowed, customers opted for the convenience of ordering sporting good equipment online. Over the past year, the family business had not only seen a decline in profits, but also at times experienced a loss, not making enough sales to cover the cost of operating the business. The Blair family children, now grown, considered what to do as they stepped into ownership of the business. On one hand, they could decide to close the business. On the other hand, keeping the business open felt important to the town. There were frequently “emergency” needs that the business was able to fulfill, like replacing broken or lost equipment for student athletes. In addition, the business was able to provide equipment with the logos of local high school and elementary schools. It was not simple to get the customized logos and equipment from national chains. The Blair children recognize the business had been a point of pride throughout their own childhoods and wanted to provide the same point of pride for their children. They are considering what could make the business successful again.Before investing in expensive equipment to start a monogramming service, the Blair children should consider outsourcing the monogramming at first to see if there is demand, thus engaging in which of the following components of new product development?Multiple Choiceidea developmentcommercializationproduct developmenttest marketingbusiness analysis

The marketing concept requires companies to:Group of answer choicesbalance customer satisfaction with the short-term welfare of societymeet customer needs in ways different from that of competitors.balance company profits with the short-term welfare of societyimplement radical strategies to meet the changing needs of customers.Next

Marketing is the process of creating and delivering value-based arguments for your offerings

A cutlery firm has always relied upon advertising to market its quality products to final customers. The marketing team is now considering beginning a direct and digital marketing campaign consisting of a company website, email to current customers and an online catalogue. Which of the following would the team expect to gain as a result of implementing this direct marketing plan?a.More control over customers’ interactions with the company.b.A higher cost-per-contact that could prove to be more cost effective than advertising in mass media.c.A wealth of information about competitors and their products.d.The ability to increase the range of products the company offers.e.The ability to learn more about their customers and tailor offerings to fit their needs.