Deck 6: Setting Prices and Implementing Revenue Management

Question 1

Variable costs include all but which of the following?

A)Labour Cost
B)Fuel Cost
C)Repairs costs
D)Salaries

Answer 1

D

Question 2

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 2

A

Question 3

Revenue management practices that help build customers' fairness perceptions include ____________.

A)designing clear and logical prices
B)using high publishes prices
C)frame fences as discounts
D)"hiding" discounts through bundling
E)All of the above

Answer 3

E

Question 4

To make a profit, a firm must set its price low enough to attract customers.

Question 5

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

Question 6

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

Question 7

____________ 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

Question 8

Filling in an account opening form that requires lot of detailed information is a form of ____________.

A)psychological cost
B)physical cost
C)sensory cost
D)time cost

Question 9

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

Question 10

Break-even analysis allows managers to know the sales volume at which service will become profitable.

Question 11

The pricing tripod consists of costs, competition and volume.

Question 12

____________ 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 13

Which of the following is NOT an example of price complication?

A)Fluctuating air fare
B)Commissions
C)Expressway toll
D)Listed price

Question 14

In credence services, the customers do not have the skills or knowledge to assess value.

Question 15

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

Question 16

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 17

Revenue management involves setting prices according to predicted demand levels among different market segments.

Question 18

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

Question 19

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 20

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 21

Draw a graph of the relationship between price per seat on an airline and demand for seats. Label each price bucket.

Question 22

EasyJet needs the following to justify its low prices and to break even:

A)High load factor
B)Higher sales
C)Higher physical costs
D)Only a & b
E)All of the above

Question 23

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

Question 24

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

Question 25

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

Question 26

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

Question 27

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 28

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

Question 29

What are the objectives for pricing of services?

Question 30

Under what situations can price competitions be reduced?

Question 31

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

Question 32

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 33

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

Question 34

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

Question 35

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

Question 36

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

Question 37

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 38

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 39

What three components are considered in a pricing strategy?

Question 40

What different forms of payment methods are can customer use other than cash?

A) Credit or debit card
B) App-based payment
C) Touch ID
D) All of the above

Question 41

Describe how airlines utilize revenue management to enhance profitability.

Question 42

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

Question 43

Relate fairness perceptions to DVD rental late fees.

Question 44

Name two e-tailers that utilize traditional auction models.

Question 45

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