Product Pricing Component Organization: Maytag Term Paper

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If two goods are substitutes, we should expect to see consumers purchase more of one good when the price of its substitute increases." (Moffat, 2006) How much a price range is there, really one might ask? Although some washers, for example, may be several hundred dollars more or less expensive than others, the higher line goods posses more desirable amenities or physical features desired by the higher-end consumer. Hence, within different price ranges, there is much less apparent elasticity. Also, market consolidation must be taken into a factor. Given the relatively narrow range of substitute goods, and the merger of many of the leading appliance manufactures, one would describe the demand for the appliances produced by Maytag to be relatively inelastic, within particular varieties of durable goods.

Describe the issues that affect consumer and the price

Consumers do not buy washing machines or refrigerators on an annual basis. The purchase of a home good is a major purchase requiring research and thought. Thus, consumers will often sacrifice price, to some extent, to get a more reliable and longer-lasting brand such as Maytag. On the other hand, however, because so much research and thought goes into the purchase, consumers are also willing to shop around.

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The price offered by different local stores, and promotions may affect the pricing of the good, so consumers may wait until they can find a good discount or sale period. Finally, because some consumers must borrow money to purchase such necessities, the interest rate, or availability of inexpensive lines of credit, may be a crucial factor in making decisions about purchases.

Suggest strategies to enhance revenue based upon all of the above information

One possible asset possessed by Sears that Maytag does not have is that Sears can sell its goods in stores where consumers have access to Sears salespeople who will give consumers information about the product in a face-to-face manner and perhaps suggest Sears products over other products at the stores. Maytag could create its own line of stores specifically designed to sell Maytag appliances, staffed by knowledgeable salespersons. Finally, Maytag could also attempt to encroach upon Sears' slightly lower-end, lower-cost market niche in home goods by offering high quality, low maintenance, low price 'no frills' lines of its most popular products, as well as luxury versions.

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