bussiness investment
Consider the discussion in the article below on the pricing practices of online travel website Orbitz. Based on discussion and application of the relevant theoretical accounts on this type of pricing policies, (1) explain the microeconomic foundations for Orbitz actions, and (2) assess their likely sustainability in online retail markets.
This essay with address the pricing policies carried out by Orbitz, going into detail about the microeconomic foundations for Orbitz actions. This will include price discrimination, price elasticity of demand, consumer choice and profit maximisation. Also it will address the degree to which they are likely to remain sustainable in online retail markets while using this strategy. This will mainly deal with market structures and consumer loyalty. Orbitz Worldwide is a leading travel agency which owns a range of consumer brands including Orbitz, CheapTickets, HotelClub and many more. It allows customers to purchase a range of different travel products and services, these include: hotels, transport, travel insurance and other packages. (Google Finance, 2012) Despite the fact that it is one of the leading online travel agencies it has seen a fall in stocks by more than 74% since its 2007 IPO, also in 2011 it lost $37 million.(Mattioli, 2012) This shows that Orbitz adapting a successful pricing policy is essential for them to maintain market share and stay competitive. The pricing policy adapted by Orbitz is showing Mac users more expensive hotels than those hotels shown to PC users.
Microeconomic foundations for Orbitz actions
Price discrimination is where the seller charges different prices to different groups for identical goods, for reasons which are not associated with price (Riley,2006). Though Orbitz are not directly price discriminating, it can be said that they are indirectly price discriminating. Orbitz encourage Mac users to buy more expensive similar goods by showing Mac users more expensive hotels when they enter the
This essay with address the pricing policies carried out by Orbitz, going into detail about the microeconomic foundations for Orbitz actions. This will include price discrimination, price elasticity of demand, consumer choice and profit maximisation. Also it will address the degree to which they are likely to remain sustainable in online retail markets while using this strategy. This will mainly deal with market structures and consumer loyalty. Orbitz Worldwide is a leading travel agency which owns a range of consumer brands including Orbitz, CheapTickets, HotelClub and many more. It allows customers to purchase a range of different travel products and services, these include: hotels, transport, travel insurance and other packages. (Google Finance, 2012) Despite the fact that it is one of the leading online travel agencies it has seen a fall in stocks by more than 74% since its 2007 IPO, also in 2011 it lost $37 million.(Mattioli, 2012) This shows that Orbitz adapting a successful pricing policy is essential for them to maintain market share and stay competitive. The pricing policy adapted by Orbitz is showing Mac users more expensive hotels than those hotels shown to PC users.
Microeconomic foundations for Orbitz actions
Price discrimination is where the seller charges different prices to different groups for identical goods, for reasons which are not associated with price (Riley,2006). Though Orbitz are not directly price discriminating, it can be said that they are indirectly price discriminating. Orbitz encourage Mac users to buy more expensive similar goods by showing Mac users more expensive hotels when they enter the