6. Smartone is one of the largest mobile network carriers in Hong Kong. In order to suit...

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6. Smartone is one of the largest mobile network carriers in Hong Kong. In order to suit different needs, it offers a great range of price plans. For instance, if a customer wants to subscribe to a 5GB monthly plan, there are two choices with different prices.

For the customers who subscribe to the plan with their own iPhone 5s, the monthly fee for the 5GB plan with a 24-month contract term is HK$258.
However, customers may choose to pay a monthly fee of HK$448 for the same plan and get a free iPhone 5s, which sells for HK$5,180 at Apple stores in Hong Kong.
The 5GB monthly plan includes 2,400 voice minutes. After those voice minutes are exhausted, extra charges apply. For up to 300 extra minutes, the charge is HK$0.15 per minute; and from 301 to 1000 minutes, the charge is HK$0.02 per minute.
The 5GB monthly plan also includes free intranetwork SMS, which allows Smartone customers to send free SMS to other Smartone customers.
However, if Smartone customers send an SMS to recipients who use the service provided by other mobile network carriers, each SMS is charged at HK$0.5.68 Discuss how the pricing strategies of Smartone relate to those presented in this chapter.

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Economics For Managers

ISBN: 9781292060095

3rd Global Edition

Authors: Paul Farnham

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