1. Suppose two firms, Southwest Airlines and United Airlines, are competing in the commercial airline market in which downstream buyer preferences are identical. Suppose United Airlines charges some positive price for a major corporation to sign an agreement for discounted fares for its employees and Southwest Airlines doesn't.

a. Is airline travel a search good or an experience good? Explain.

b. Which firm is likely to provide the greatest value created? Explain.

2. Analysts sometimes suggest that firms should outsource low value-added activities. Under what conditions do you agree? Explain.

3. a. Why would the role of the marketing department in capital-intensive industries (e.g., aluminum) differ from that in labor-intensive industries (e.g., commercial airlines)?

b. How does this relate to positioning?

4. Identify one experience good that you purchased recently. Identify one search good you purchased recently that was made in an industry that is NOT capital intensive.

a. Explain how the retailing of that experience good differs from the retailing of that search good.

b. How do these differences help consumers?  

5. Consumers often identify top brand names with quality. Think of a branded beverage you buy regularly (perhaps Coca Cola or Pepsi).

a. Are you convinced it's of higher quality than another beverage you could have purchased (e.g., a similar beverage with a Stripes Convenience Store or Walmart brand name), therefore justifying the higher price you pay?

b. If so, why doesn't Stripes or Walmart invest to establish a brand identity, thereby enabling the company to raise prices of these beverages?