INTRODUCTION TO MARKETING

Running Head: Introduction to Marketing
Introduction to Marketing
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INTRODUCTION TO MARKETING1
Question 1
What type of pricing is used in conjunction with coupons to create situations of extreme
couponing?
The type of pricing that is used in conjunction with the couponing technique is the
technique of skimming pricing. Price skimming can be defined as the strategy which the firm
applies by placing a relatively high price for their products at first and then after judging
customer satisfaction, lowers the price to a certain level to suit the more price sensitive customer
base.
The most common implementation of price skimming happens when a new product enters the
market. It is based in a period of low competition from other parties. The objective remains to
gather as much revenue as possible before the particular niche market in which the product is
based, starts getting saturated. Price skimming is based on demand as well, which increases
during festive seasons, for example. At the time of demand the consumers are also satisfied with
the offers that are made in the coupons in the stores. However, this does not mean that the
customers are paying an extremely low price. The couponing industry thrives on the idea that
coupons offer unlimited discounts to the point where extreme couponing takes place.
Overall, it becomes important for the new product as well as the business to realize that the
industry thrives on reliability and relevance of a product in the market and the acceptance of the
product by the public. Skimming a price helps a newly launched product achieve that goal.

INTRODUCTION TO MARKETING2
Question 2
What type of strategy is used in order to get customers to go to the store to redeem their
coupons?
The strategy which is adopted to be used is a promotional strategy because this helps to
find the appropriate target audience and target market. This then allows the company to cater to
these certain customers with all the related products and services available. The customers are
then drawn in through techniques such as offering discounts, advertising and promoting the
product.
This kind of a targeted marketing has its benefits and drawbacks. The benefits include
sale increment being more probable. It almost provides a certain guarantee that a particular
percentage of the consumer base will return to the store to purchase further products. The
drawback remains that, given the coupons are meant for certain customer bases, the ones who do
not meet the criteria might not be interested in redeeming coupons. Therefore it restricts the
attraction of a certain number of people to the store as well.
Question 3
Couponers are enticed by a store flyer’s front and back pages, where strong deals are
offered that encourage consumers to visit the store. What is this type of pricing called?
Flyers are used to promote price skimming of the company which is to lure in more
customers who are more price sensitive. The company makes sure to advertise their leading
products on the flyers and also the products which have the most discounted price. This type of