IntroductionServices, such as wireless Internet service, present a unique marketing challenge for organizations. Any service has four main characteristics that companies must address in their promotion and pricing plans: intangibility, inseparability, variability, and perishability. This plan uses a pricing and promotion strategy that adjusts the controllable factors of the wireless service to cope with, and even exploit, an uncontrollable environment. Price and promotion are essential components of an effective marketing strategy and are an integral part of the marketing mix. The goal of promotion is to affect behavior, which can take the form of informing, persuading, and reinforcem ...view middle of the document...
Truckstop.net's service, and others like it, provides a better price benchmark. With the low cost structure outlined previously, McDonald's has sufficient room to price wireless service low and use the service to boost sales of food products. Table 1.1 below compares the Truckstop.net service pricing and the proposed McDonald's pricing (Truckstop.net, 2004):Table 1.1Service Truckstop.net as of August 2004 McCafé Proposed PriceUnlimited Monthly Access (Annual) $24.95 $16.67Unlimited Monthly Access (Month-to-Month) $29.95 $19.951 Day $5.95 $4.951 Hour $2.95 NONEThis McCafé wireless service pricing undercuts the Starbuck/T-Mobile pricing significantly, just as McDonald's prices its food offerings in the stores lower than Starbucks. By recognizing the downward trend in prices and offering service pricing at the low end of the market, McDonald's takes a proactive approach to addressing variability and perishability in service pricing. The company can now attract customers without constantly retooling pricing and service options in reactionary moves. The lower pricing aligns the wireless Internet service with the company's general pricing strategy. A lower price structure also focuses on the full product rollout phase. With a plan to market this service into lower-end McDonald's stores after a short trial, this unified pricing scheme gives McDonald's a product viable in competition with Starbuck/T-Mobile at the high end and truck stops, travel plazas, and small businesses on the other end. The pricing strategy is largely an extension of the Trends portion of the SWOTT analysis. Given a downward trend in prices, the growth of lower-end service offerings such as Truckstop.net, this plan leverages the McDonald's brand and positions the company for success as wireless service expectations grow.Promotional and Publicity ApproachRecognizing that its wireless and food services are inseparable in the minds of the customer, McDonalds will employ an integrated approach to the promotion of wireless access services at the McCafé restaurants. McCafé and, eventually, McDonald's restaurants will not offer wireless service as a standalone product but as an attraction to visiting the store locations and purchasing other items. This integrated approach closely tracks the "loss leader" strategies employed by Wal-Mart and other stores that sell one product at a loss in order build foot traffic that buys other, more profitable items.While McDonald's will not have to sell the wireless service at a loss, the company can exploit inseparability in its promotion and publicity for the wireless service. McDonald's will build foot traffic and interest in its stores through the wireless service and use that to generate additional profit in other areas of its business. By integrating wireless Internet service into the company's existing advertising, sales, and sales promotion expertise, McDonald's can limit the costs of promoting an entirely ...
