Product Pricing Component Organization: Maytag

¶ … Product Pricing Component

Organization: Maytag Corp

Describe the utility of that good to the immediate consumer (which may or not be another organization) and the consumer needs that the product or service meets.

The Maytag Corporation makes large, durable goods such as (most famously) washers, dryers, and kitchen appliances. The utility to the consumer, unless the consumer is an apartment-dweller with access to a Laundromat inside or outside his or building is considerable. Very few consumers can do without such large-scale appliances in their homes. (Maytag Homepage, 2006) However, even if they do not, Maytag has a presence in the commercial laundry arena, as described on one of its sister WebPages -- thus even a person who cannot own a washing machine may still be using a Maytag product while living in his or her first apartment. ("Maytag Commercial Laundry," 2006)

The pervasiveness and reputation of the Maytage name brand may be why "in major appliances, Maytag was among the top three companies in the North American market." ("Maytag," 2006, Wikipedia) Besides Maytag washers, the company also sells appliances under a variety of names, including Hoover, Jenn-Air, Amana, Dixie-Narco, and Jade. Maytag is the most famous of the company's many brands, partly because of the effectiveness of the ads that proclaimed the reliability of its washers. However, according to its homepage, the company also offeres innovative and attractive appliances in other areas, such as its triple burner ranges and refrigerators with ice and water components on the outside. Many of these additional services are not strictly necessities, such as ice makers, freezers, or even dishwashers. But all of the products provide immediate utility to the user, and most of Maytag's products are not goods or services that consumers can easily buget out of their lists of home necessities, like going out to eat, for example.

Discuss the number and closeness of substitute and/or complementary products and their impact on the pricing decision

Although such products as washers, dryers, and ovens may be necessary, there are still a wide variety of such products on the market, from bargain to high-end merchandise. Maytag markets itself a high-quality appliance, based upon the durability of its product, rather than a discount good. (Hence the famous unemployed Maytag repairman.) Maytag even has its own Collector's Club, a site not even affiliated with the company, for dedicated fans of its product.

Although there may be a fairly wide price range, depending on the amenities offered by the products within the Maytag line, overall, the major manufactures of large appliances have become fairly consolidated on a corporate, narrowing the real range of consumer choices when buying such goods. Whirlpool and Maytag are merged as a company, thus making Sears Kenmore brand and GE Maytag's primary competitors. ("Whirlpool completes acquisition of Maytag," 2006; Sears Appliances 2006 & GE, 2006) Although Sears and GE are reputable and trusted brand, both lack the name recognition attached to home appliances that Maytag possesses. Also, GE and Sears have more 'brand dilution' in that the companies are known for making many other products, from tires to light bulbs, rather than purely home-oriented goods.

Explain why the demand for the product or service is relatively elastic or relatively price inelastic

The principle of price elasticity "measures the rate of response of quantity demanded of one good, due to a price change of another good. 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. 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.