Innovation and Pricing

Look at the way online music Web sites changed the way music is purchased; it is an excellent example of how pricing schemes can be changed to meet new realities. Personal music players have become very popular, even though MP3s had been around for years prior to the release of personal music players. People bought music on CDs and paid a great deal for two songs they liked as well as several of other tracks considered fillers. That is when online music Web sites began selling single songs. This changed the industry price metric from CD to song in a time when music sales were declining.

Part 1: Researching Value Creation

• Research how value is created in products and services.
• Focus on how added value can be reflected in the pricing.

This section of the paper should be 2 pages in length and use research from the library's full-text databases. Failure to use the articles will result in a lower grade for Part 1.

Part 2: Examples of Segmentation Pricing

Using a variety of sources, including company Web sites, provide examples of different pricing structures. Research and analyze 3 different products or services that are offered at different prices for different customer segments.

• Include an overview of the product.
• Provide background on at least 2 target markets affected by the pricing menus.
• Analyze the effectiveness of the pricing scheme with regard to the competition.
• Assess how value was created to support the pricing.