Deck 6: Setting Prices and Implementing Revenue Management

Question 1

Which of the following is NOT an objective for service pricing?

A)Build supply.
B)Build demand.
C)Seek profit.
D)Cover costs.
E)Build a user base.

Answer 1

A

Question 2

Price elasticity is computed as ____________.

A)percentage change in demand / percentage change in price
B)percentage change in price / percentage change in demand
C)percentage change in supply / percentage change in price
D)percentage change in demand / percentage change in supply
E)percentage change in price / percentage change in supply

Answer 2

A

Question 3

____________ recognizes that resource expenses are linked to the variety and complexity of goods and services produced and not just on physical volume.

A)Break-even analysis
B)Variable cost
C)Fixed cost
D)Activity-based costing
E)Semi-fixed cost

Answer 3

D

Question 4

Shopbots help consumers combat dynamic pricing online.

Question 5

Revenue management is the most effective when applied to firms characterized by all the following conditions EXCEPT ______________.

A)perishable inventory
B)relatively fixed capacity
C)varying customer price sensitivity
D)fixed inventory
E)variable demand

Question 6

Psychological costs relate to unpleasant sensations affecting any of the five senses.

Question 7

Customers often incur significant financial costs in searching for,purchasing,and using a service,above and beyond the purchase price paid to the supplier.

Question 8

Shopbots collect price and product information from multiple electronic vendors and provide it to consumers.

Question 9

____________ refers to the practice of price discrimination.

A)Critical ratio pricing
B)Dynamic pricing
C)Collective pricing
D)Fixed pricing
E)Classical pricing

Question 10

Which of the following reduces price competition?

A)Increasing the number of competitors.
B)Increasing the number of substituting offers.
C)Wider distribution of competitor and/or substitution offers.
D)High switching costs for consumers.
E)Increasing surplus capacity in the industry.

Question 11

Which of the following is NOT an example of a non-physical fence?

A)Time or duration of use.
B)Group membership.
C)Service level.
D)Flexibility of ticket usage.
E)Location of reservation.

Question 12

Because quality is subjective,all customers have the expertise to assess the quality and value they receive.

Question 13

Customers will often pay more for services than they think they are worth.

Question 14

Which of the following intensifies price competition?

A)Non-price-related costs of using competing alternatives are high.
B)Wider distribution of competitor and or substitution offers.
C)Personal relationships have been established.
D)Switching costs are high.
E)Customer need for time and location specificity.

Question 15

Firms that are always reacting to competitors' price changes run the risk of pricing higher than might really be necessary.

Question 16

____________ is defined as the sum of all the perceived benefits minus the sum of all the perceived costs of service.

A)Net value
B)Consumer surplus
C)Gross value
D)Moderate value
E)Consumer demand

Question 17

Firms do not need to consider post-purchase costs,as they occur after the firm has already secured a purchase.

Question 18

Business owners often fail to recognize the fixed costs that need to be recouped when providing service.

Question 19

Pricing is less complex in services than it is in manufacturing.

Question 20

What three components are considered in a pricing strategy?

Question 21

Describe how rate fences should be used in a hair salon service.

Question 22

What are the four distinct categories of non-monetary costs?

Question 23

Yield management computers can determine who is likely to not show up or take other flights.

Question 24

Under what situations can price competitions be reduced?

Question 25

The amount of seats reserved for each class of American Airlines passengers on a flight is referred to as a ____________.

A)field
B)row
C)column
D)bucket
E)gamble

Question 26

Which of the following is NOT listed in the chapter as a firm that uses online reverse auctions?

A)Priceline.com
B)Hotwire.com
C)eBay.com
D)Lowestfare.com
E)All of the above use online reverse auctions.

Question 27

Which of the following is the best example of a service firm that attracts customers with low base prices and then piles on additional fees.

A)Rental cars
B)Fast food
C)Education
D)Roofing
E)Consulting

Question 28

Amazon.com is a good example of a firm that aggravated its customers with dynamic pricing.

Question 29

Give an example of a tradeoff between monetary and non-monetary costs associated with patronizing a dental clinic.

Question 30

Name two e-tailers that utilize traditional auction models.

Question 31

Which of the following is NOT a firm that uses dynamic pricing?

A)Eagles
B)Yahoo.com
C)Tickets.com
D)Priceline.com
E)All of the above firms use dynamic pricing.

Question 32

Which of the following is the best example of a service industry that utilizes price complexity?

A)Fast food
B)Education
C)Cellular phone
D)Moving/transportation
E)Roofing

Question 33

How can firms have revenue management practices and yet still have customer satisfaction,trust and good will?

Question 34

Airlines,hotels,and car rental firms are not very good at varying prices in response to the price sensitivity and needs of different market segments.

Question 35

What are rate fences? Provide examples to aid your explanation.

Question 36

Tickets.com is a good example of a firm that successfully generated more revenue by implementing dynamic pricing.

Question 37

Relate fairness perceptions to DVD rental late fees.

Question 38

Describe the concept of price elasticity and draw a graph comparing consumers with high and low elasticity.

Question 39

Freight companies often use a combination of distance and weight or shape of parcel as a basis to price their services.

Question 40

Discuss how service firms can minimize non-monetary purchase costs.

Question 41

Give an example of a service firm that uses service recovery to compensate for overbooking and discuss how the firm compensates.

Question 42

Describe how airlines utilize revenue management to enhance profitability.

Question 43

Discuss how a health club could strategically manage capacity via payment schedules.