SCENARIOS
Continental Lite
In the mid-1990s,Continental Airlines chose to compete head-on with Southwest Airlines by launching Continental Lite,an alternative low-fare commercial airline passenger operation.Top executives at Continental had expected its no-frills operation to break even within a year of its inception,but the airline fell short of the goal.A source close to the company explained it by saying,"Its costs were too high,and its revenues were too low." Some observers criticized Continental's marketing efforts.When the no-frills service was first launched,it lacked a distinct name or identity,missing its chance to make a splash.Then Continental tried to sell three "brands" at once--Lite,a new premium service,and its more traditional long-haul domestic flights.As one rival expressed it,"You cannot be all things to all people."
-Refer to Consumer Buying Habits.In the past,Procter & Gamble set prices on significant brands such as Pampers so that total revenue was as large as possible relative to total costs.This represents a _____ approach.

Question

Quizplus · Accepted Answer

The scenario describes how Continental Lite failed to break even due to high costs and low revenues. This indicates that the company was not focused on maximizing sales or market share, but rather on maximizing profits. Therefore, Procter & Gamble's approach of setting prices to maximize total revenue relative to costs aligns with profit maximization.

SCENARIOS Continental Lite